Time left U:00:55 Figure B Boeing (B) High Price A: $50 B: - $10 Low Price Low A: $5 Price Airbus (A) B: $4 High A: - $10 Price B: $40 A: $40 B: $30 [MUST SHOW ROUGH WORK] Figure B shows the payoffs in terms of economic profits for Airbus and Boeing in billions of dollars. Each company has two strategies: (1) charge a low price, or (2) charge a high price. In a Nash equilibrium, what are the economic profits of Boeing? Select one: A. - $10 billion B. $40 billion O C. $4 billion D. $5 billion E. $30 billion

Time left U:00:55 Figure B Boeing (B) High Price A: $50 B: - $10 Low Price Low A: $5 Price Airbus (A) B: $4 High A: - $10 Price B: $40 A: $40 B: $30 [MUST SHOW ROUGH WORK] Figure B shows the payoffs in terms of economic profits for Airbus and Boeing in billions of dollars. Each company has two strategies: (1) charge a low price, or (2) charge a high price. In a Nash equilibrium, what are the economic profits of Boeing? Select one: A. - $10 billion B. $40 billion O C. $4 billion D. $5 billion E. $30 billion

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter16: Bargaining

Section: Chapter Questions

Problem 2MC

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5. Individual Problems 18-5 When a famous painting becomes available for sale, it is often known which museum or collector will be the likely winner. Yet, the auctioneer actively woos representatives of other museums that have no chance of winning to attend anyway. Suppose a piece of art has recently become available for sale and will be auctioned off to the highest bidder, with the winner paying an amount equal to the second highest bid. Assume that most collectors know that Simone places a value of $65,000 on the art piece and that she values this art piece more than any other collector. Suppose that if no one else shows up, Simone simply bids $65,0002=$32,500$65,0002=$32,500 and wins the piece of art. The expected price paid by Simone, with no other bidders present, is . Suppose the owner of the artwork manages to recruit another bidder, Yakov, to the auction. Yakov is known to value the art piece at $52,000. The expected price paid by Simone, given the…
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