Suppose that Firm A and Firm B are independently deciding whether to sell at a low price or a high price. The payoff matrix belowshows the profits per year for each company resulting from the two price options.Firm B High PriceFirm B Low Price$5 million$2 million$3 million$1 million$4 million$5 million$2 million$3 milliona. Does Firm A have a dominant strategy?O The dominant strategy for Firm A is a low price.O The dominant strategy for Firm A is a high price.O No, there is no dominant strategy for Firm A.b. Does Firm B have a dominant strategy?O The dominant strategy for Firm B is a high price.The dominant strategy for Firm B is a low price.O No, there is no dominant strategy for Firm B.c. What are the Nash equilibria in this game?Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once toplace a check mark. For incorrect answer(s), click the option twice to empty the box.2 Firm A charges a low price and Firm B charges a high price.2 There are no Nash equilibria in this situation.? Both Firm A and Firm B charge a high price.? Both Firm A and Firm B charge a low price.2 Firm A charges a high price and Firm B charges a low price.Firm A Low Price Firm A High Price

Dominant strategy is such strategy that a player would always choose, no matter what strategy the…

Suppose that Firm A and Firm B are independently deciding whether to sell at a low price or a high price. The payoff matrix below shows the profits per year for each company resulting from the two price options. Firm B High Price Firm B Low Price $5 million $2 million $3 million $1 million $4 million $5 million $2 million $3 million a. Does Firm A have a dominant strategy? O The dominant strategy for Firm A is a low price. O The dominant strategy for Firm A is a high price. O No, there is no dominant strategy for Firm A. b. Does Firm B have a dominant strategy? O The dominant strategy for Firm B is a high price. O The dominant strategy for Firm B is a low price. O No, there is no dominant strategy for Firm B. c. What are the Nash equilibria in this game? Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. 2 Firm A charges a low price and Firm B charges a high price. 7 There are no Nash equilibria in this situation. 2 Both Firm A and Firm B charge a high price. 2 Both Firm A and Firm B charge a low price. 2 Firm A charges a high price and Firm B charges a low price. Firm A Low Price Firm A High Price

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P