Probability of Firm 1 choosing 'Low Price': number, rounded to four decimal places and use in subsequent calculations) (Enter your answer as a decimal Firm Question 2 mixed strategy Nash equilibrium. Calculate the probability of Firm 2 choosing 'Low Price' in the Low Medium High 45.87 51.26 41.2 Probability of Firm 2 choosing 'Low Price': number, rounded to four decimal places and use in subsequent calculations) (Enter your answer as a decimal Low 26.97 39.71 46.71 Payoffs in the mixed strategy Nash equilibrium: 72.39 65.42 53.8 Medium 18.64 Firm 2 Now calculate the expected payoffs to each firm in the mixed strategy Nash equilibrium. 41.27 41.27 Calculate the expected payoff to Firm 1 in the equilibrium. 98.31 79.63 86.9 Expected payoff to Firm 1: $ two decimal places). (Enter your answer as a decimal number, rounded to High 1.97 16.27 27.13 Question 4 Calculate the expected payoff to Firm 2 in the eqiulibrium. Expected payoff to Firm 2: $ two decimal places). (Enter your answer as a decimal number, rounded to .....

Probability of Firm 1 choosing 'Low Price': number, rounded to four decimal places and use in subsequent calculations) (Enter your answer as a decimal Firm Question 2 mixed strategy Nash equilibrium. Calculate the probability of Firm 2 choosing 'Low Price' in the Low Medium High 45.87 51.26 41.2 Probability of Firm 2 choosing 'Low Price': number, rounded to four decimal places and use in subsequent calculations) (Enter your answer as a decimal Low 26.97 39.71 46.71 Payoffs in the mixed strategy Nash equilibrium: 72.39 65.42 53.8 Medium 18.64 Firm 2 Now calculate the expected payoffs to each firm in the mixed strategy Nash equilibrium. 41.27 41.27 Calculate the expected payoff to Firm 1 in the equilibrium. 98.31 79.63 86.9 Expected payoff to Firm 1: $ two decimal places). (Enter your answer as a decimal number, rounded to High 1.97 16.27 27.13 Question 4 Calculate the expected payoff to Firm 2 in the eqiulibrium. Expected payoff to Firm 2: $ two decimal places). (Enter your answer as a decimal number, rounded to .....

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 9PA

See similar textbooks

Similar questions

Questions: A) How much less do each of these firms earn in the Nash equilibrium than if they jointly maximize profits? Please provide me with the correct answer, complete with a detailed explanation and calculations; otherwise, I will give multiple downvotes.Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
on 8.1 Consider the following game: Player 1 A C D 7,6 5,8 0,0 Player 2 E 5,8 7,6 1, 1 F 0,0 1,1 4,4 a. Find the pure-strategy Nash equilibria (if any). b. Find the mixed-strategy Nash equilibrium in which each player randomizes over just the first two actions. c. Compute players' expected payoffs in the equilibria found in parts (a) and (b). d. Draw the extensive form for this game.
13) Two identical firms are engaged in Cournot competition, with cost functionsTCA(QA) = 30 QA and TCB(QB) = 30 QB. The market demand is given by P = 480 –3Q.a) Plot the best response functions and report the Cournot-Nash equilibrium quantities, price and profits.b) What are the prices, quantities, and profits for the firms if they decide to collude and share profits equally?c) Show that firms have an incentive the deviate from the collusive outcome.d) Find the Stackelberg equilibrium if A leads and B follows.e) Show the equilibria in the previous parts on the inverse demand function. Calculate and identify consumersurplus and deadweight loss in each equilibrium. If you can only answer a limited amount of questions, please answer d and e :)
Suppose O2 and Vodafone are the only two telecommunicationscompanies in UK. Both companies are considering whether ornot to stop offering unlimited data plans. Each company has twostrategies: stop or don’t stop. The first entry in the brackets is the payoffsof O2 and the second entry is the payoffs of Vodafone, both in $million.What will be the dominant strategies of O2 and Vodafone and what willbe the Nash equilibrium? Explain your answers.
q52 If you advertise and your rival advertises, you each will earn 14 million in profits. If neither of you advertises, you will each earn 20 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn 10 million and the non-advertising firm will earn 16 million. If you and your rival plan to be in business for only one year, the Nash equilibrium is a. for each firm to advertise. b. for the other firm to advertise and your firm not to advertise. c. for your firm to advertise and the other not to advertise. d. for neither firm to advertise.
1. Consider the pricing game between firm 1 (row) and firm 2 (column) belowwhere each number represents the profits made by each firm.:Table 1: Pricing gameLow HighLow 288,288 360,216High 216,360 324,324 a) Point out the Nash equilibrium. Is this a unique Nash equilibrium?c) What type of commitment can firm 1 make to improve its pay-off?Can it be classified as a threat or promise? (Assume that the commitmentis credible.)d) How would you represent the game as a game tree with the option tocommit?2. Consider the signalling / production game with the order of play given below.Assuming that the signal is informative (i.e. education is sufficiently costly),how would you change the order of the game to make sure that poolingequilibriums are ruled out? Verbally motivate your answer.• Nature chooses ability of the workers a ∈ (H, L), ability is observed byworkers but not employers.• The worker choose an education level s ∈ (0, 1).• The employer offer contracts w(s).• The worker accepts or…
Three retail chains are each deciding whether to locate a store in town A or town B. The profit or payoff that a chain receives depends on the town selected and the number of other chains that put stores in that town; see accompanying table. (given) a. Find a symmetric mixed-strategy Nash equilibrium in which chainsrandomize.b. Find all mixed-strategy Nash equilibria in which one of the chains putsa store in town A for sure.c. Find all mixed-strategy Nash equilibria in which one of the chains putsa store in town B for sure.
1) Put together an example of a 2x2 game (two players with each having two options) that has NO pure-strategyNash equilibria. (Hint: just try some values and then change them as you need to; as an example think aboutthe Rock, Scissors paper which has no pure strategy NE).2) Using your own words, explain how the concept of elimination of dominated strategies differs from theconcept of Nash equilibrium.3) Indicate whether the following statement is TRUE or FALSE and explain your answer: If one player is theleader in a game it means that s/he has the first move in the game. The key thing is that this move can beobserved by the follower before making his/her own decision, otherwise it would be a simultaneous movegame that cannot be solved by backwards induction.4) MULTIPLE CHOICE (identify the one best answer below and explain your reasoning for each option): Recallthe Game of chicken from the previous problem set. If James is the leader in the game then: (hint: you candraw the game tree…
Two identical firms are engaged in Cournot competition, with cost functionsTCA(QA) = 10 QA and TCB(QB) = 10 QB. The market demand is given by P = 610 –2Q.a) Plot the best response functions and report the Cournot-Nash equilibrium quantities, price and profits.b) What are the prices, quantities, and profits for the firms if they decide to collude and share profits equally? c) Show that firms have an incentive the deviate from the collusive outcome.d) Find the Stackelberg equilibrium if A leads and B follows.e) Show the equilibria in the previous parts on the inverse demand function. Calculate and identify consumer surplus and deadweight loss in each equilibrium..
Solve for the Stackelberg subgame-perfect Nash equilibrium for the fol- lowing game tree (see next page). What is the joint-profit maximizing outcome? Why is that not the outcome of this game?
Suppose we’ve modelled a firm’s entry decision with a one-shot, simultaneous move game, determined payoffs and found the Nash equilibrium. Suppose with the payoffs we came up with, both firms have a clear dominant strategy such that there is a Nash equilibrium in which both firms play their dominant strategy. However, when we observe the actual actions of the firms, we see that they don’t choose the strategy wepredicted and the outcome of the game doesn’t match the Nash equilibrium. What are 4 reasons this might be? (Hint: The firms are rational.)
Joe and Rebecca are small-town ready-mix concrete duopolists. The market demand function is Qd = 10,000 – 100P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $25 per cubic yard. Suppose that Joe and Rebecca compete in quantities and competition in this market is described by Cournot model. What are Joe and Rebecca’s Nash equilibrium outputs? What is the resulting price? What do they each earn as profit? How does the price compare to the marginal cost? Joe and Rebecca are small-town ready-mix concrete duopolists. The market demand function is Qd = 10,000 – 100P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $25 per cubic yard. Suppose that Joe and Rebecca compete in quantities and competition in this market is described by Cournot model. What are Joe and Rebecca’s Nash equilibrium outputs? What is the resulting price? What do they each…