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True or False: Only Little Kona has a dominant strategy in this game. O True O False Which of the following outcomes represent a Nash equilibrium in this case? Check all that apply. Big Brew maintains a high price and Little Kona does not enter. Big Brew maintains a low price and Little Kona does not enter. Big Brew maintains a high price and Little Kona enters. Big Brew maintains a low price and Little Kona enters. Big Brew threatens Little Kona by saying, "If you enter, we're going to set a low price, so you had better stay out." True or False: Little Kona should believe the threat. O True False If the two firms could collude and agree on how to split the total profits, what outcome would they pick? Big Brew maintains a low price and Little Kona enters. Big Brew maintains a low price and Little kona does not enter. O Big Brew maintains a high price and Little Kona does not enter. O Big Brew maintains a high price and Little Kona enters.

True or False: Only Little Kona has a dominant strategy in this game. O True O False Which of the following outcomes represent a Nash equilibrium in this case? Check all that apply. Big Brew maintains a high price and Little Kona does not enter. Big Brew maintains a low price and Little Kona does not enter. Big Brew maintains a high price and Little Kona enters. Big Brew maintains a low price and Little Kona enters. Big Brew threatens Little Kona by saying, "If you enter, we're going to set a low price, so you had better stay out." True or False: Little Kona should believe the threat. O True False If the two firms could collude and agree on how to split the total profits, what outcome would they pick? Big Brew maintains a low price and Little Kona enters. Big Brew maintains a low price and Little kona does not enter. O Big Brew maintains a high price and Little Kona does not enter. O Big Brew maintains a high price and Little Kona enters.

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter17: Oligopoly
Section: Chapter Questions
Problem 9PA
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Little Kona is a small coffee company that is considering entering a market dominated by Big Brew. Each company's profit depends on whether Little Kona enters and whether Big Brew sets a high price or a low price: Little Kona True True or False: Only Little Kona has a dominant strategy in this game. False Big Brew High Price Low Price Enter $2 million, $3 million $2 million, $1 million Don't Enter 50, 58 million $0, $3 million Which of the following outcomes represent a Nash equilibrium in this case? Check all that apply. Big Brew maintains a high price and Little Kona does not enter. Big Brew maintains a low price and Little Kona does not enter. Big Brew maintains a high price and Little Kona enters. Big Brew maintains a low price and Little Kona enters. Big Brew threatens Little Kona by saying, "If you enter, we're going to set a low price, so you had better stay out." Thin True or False: Little Kona should believe the threat.
Transcribed Image Text:Little Kona is a small coffee company that is considering entering a market dominated by Big Brew. Each company's profit depends on whether Little Kona enters and whether Big Brew sets a high price or a low price: Little Kona True True or False: Only Little Kona has a dominant strategy in this game. False Big Brew High Price Low Price Enter $2 million, $3 million $2 million, $1 million Don't Enter 50, 58 million $0, $3 million Which of the following outcomes represent a Nash equilibrium in this case? Check all that apply. Big Brew maintains a high price and Little Kona does not enter. Big Brew maintains a low price and Little Kona does not enter. Big Brew maintains a high price and Little Kona enters. Big Brew maintains a low price and Little Kona enters. Big Brew threatens Little Kona by saying, "If you enter, we're going to set a low price, so you had better stay out." Thin True or False: Little Kona should believe the threat.
True or False: Only Little Kona has a dominant strategy in this game. O True O False Which of the following outcomes represent a Nash equilibrium in this case? Check all that apply. Big Brew maintains a high price and Little Kona does not enter. Big Brew maintains a low price and Little Kona does not enter. Big Brew maintains a high price and Little Kona enters. Big Brew maintains a low price and Little Kona enters. Big Brew threatens Little Kona by saying, "If you enter, we're going to set a low price, so you had better stay out." True or False: Little Kona should believe the threat. O True O False If the two firms could collude and agree on how to split the total profits, what outcome would they pick? Big Brew maintains a low price and Little Kona enters. Big Brew maintains a low price and Little Kona does not enter. Big Brew maintains a high price and Little Kona does not enter. Big Brew maintains a high price and Little Kona enters. O
Transcribed Image Text:True or False: Only Little Kona has a dominant strategy in this game. O True O False Which of the following outcomes represent a Nash equilibrium in this case? Check all that apply. Big Brew maintains a high price and Little Kona does not enter. Big Brew maintains a low price and Little Kona does not enter. Big Brew maintains a high price and Little Kona enters. Big Brew maintains a low price and Little Kona enters. Big Brew threatens Little Kona by saying, "If you enter, we're going to set a low price, so you had better stay out." True or False: Little Kona should believe the threat. O True O False If the two firms could collude and agree on how to split the total profits, what outcome would they pick? Big Brew maintains a low price and Little Kona enters. Big Brew maintains a low price and Little Kona does not enter. Big Brew maintains a high price and Little Kona does not enter. Big Brew maintains a high price and Little Kona enters. O
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