You and your rival must simultaneously decide what price to advertise in the weekly newspaper. If you each charge a low price, you each earn zero profits. If you each charge a high price, you each earn profits of GH¢3. If you charge different prices, the one charging the higher price loses GH¢5 and the one charging the lower price makes GH¢5. i. Find the equilibrium when there are no repeated transactions. ii. Now suppose there are repeated transactions. How would that change the results?
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You and your rival must simultaneously decide what
i. Find the equilibrium when there are no repeated transactions.
ii. Now suppose there are repeated transactions. How would that change the results?
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- You are the manager of a golf course. For simplicity assume that you only have two potential customers – a high demand customer whose inverse demand for golf services is given by P = 10 – 0.5Q and a low demand customer whose inverse demand for golf services is given by P = 8 – 0.5Q. Suppose the marginal cost to the golf course of each round of golf is zero.Suppose you have to charge both players the same two-part pricing strategy. Which of the following pricing strategies will yield the highest profit for you? A. Charge a fixed fee of €100 and a per unit fee of zero B. Charge a fixed fee of €64 and a per unit fee of zero C. Charge a fixed fee of €64 and a per unit fee of €4 D. Charge a fixed fee of €128 and a fixed fee of zero.Three products compete in a market and their demand and supply functions are qd1 = 44-2p1+p2+p3 qs1 = -10+3p1 qd2 = 25+ p1 –p2 +3p3 qs2 = -15+5p2 qd3 = 40 +2p1+p2 -3p3 qs3 = -18+2p3 where p1, p2, and p3 are the prices. Determine the prices and quantities which result in equilibrium in each market using Cramer’s rule.American Airlines and Braniff Airways are the two airlines operating flights from your region. Suppose that each company can charge either a high price for tickets or a low price. First, American Airlines will choose the price level. Following this, Braniff Airways will observe its competitor’s decision and choose the price level for its tickets. If both of the companies choose High, they earn $25,000 each. If they both choose Low, they earn $18,000 each. If the companies choose different levels of prices, the one choosing the high price will earn $15,000 and the one choosing Low will earn $30,000. a) Draw the game three. b) Solve the game by using backwards induction. c) If Braniff Airlines makes a promise to choose High if American Airlines chooses High, should American Airlines trust this promise? Explain.
- You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: splishy splashers, raskels, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashers decreases by 8%, the quantity of raskels sold increases by 6% and the quantity of kipples sold decreases by 8%. Your job is to use the cross-price elasticity between splishy splashers and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price…Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 6 units of utility, while the small rival suffers a loss of utility of 2. If the two companies select the same technology, Microsoft suffers a loss of utility of 2 while the rival gains 2 units of utility. Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously. Microsoft Technology A Technology B Rival Technology A Rival: , Microsoft Rival: , Microsoft Technology B Rival: , Microsoft Rival: , Microsoft True or False: There is no equilibrium in pure strategies. True False Note:- Do not provide handwritten…Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 4 units of utility, while the small rival suffers a loss of utility of 2. If the two companies select the same technology, Microsoft suffers a loss of utility of 2 while the rival gains 2 units of utility. Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously. Microsoft Technology A Technology B Rival Technology A Rival: , Microsoft Rival: , Microsoft Technology B Rival: , Microsoft Rival: , Microsoft True or False: There is an equilibrium for this game in pure strategies.
- Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 3 units of utility, while the small rival suffers a loss of utility of 1. If the two companies select the same technology, Microsoft suffers a loss of utility of 1 while the rival gains 1 units of utility.Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of consumers who purchase its dolls: low-value consumers and high-value consumers. Each of the low-value consumers tends to purchase one doll and one accessory, with a total willingness to pay of $44. Each of the high-value consumers buys one doll and two accessories and is willing to pay $82 in total. Mattel is currently considering two pricing strategies: • Strategy 1: Sell each doll for $22 and each accessory for $22 • Strategy 2: Sell each doll for $6 and each accessory for $38 In the following table, indicate the revenue for a low-value and a high-value customer under strategy 1 and strategy 2. Then, assuming each strategy is applied to one low-value and one high-value customer, indicate the total revenue for each strategy. Revenue from Low-Value Customers Revenue from High-Value Customers Total Revenue from Strategy $44 Value, 1 Accessory $82 Value, 2…Given the following demand and supply functions for two competing products. Qd1 =82 – 3p1 + p2; Qs1 = 15p1 – 5; Qd2 = 92 + 2p1 – 4p2; Qs2 = 32p2 - 6 Determine whether there are prices which bring the supply and demand levels into equilibrium for the two products. If so, what are the equilibrium quantities?
- You and a classmate are assigned a project on which you will receive one combined grade. You each want to receive a good grade, but you also want to avoid hard work. In particular, here is the situation: • If both of you work hard, you both get an A, which gives each of you 40 units of happiness. • If only one of you works hard, you both get a B, which gives each of you 30 units of happiness. • If neither of you works hard, you both get a D, which gives each of you 10 units of happiness. • Working hard costs 25 units of happiness. Complete the following payoff matrix given the previous information. In each cell, your classmate's payoff is on the left and yours is on the right. Your Decision Work Shirk Classmate's Decision Work , , Shirk , , The likely outcome is that your classmate and you . If you get this classmate as your partner on a series of projects throughout the year, rather than only once, you are…You and a classmate are assigned a project on which you will receive one combined grade. (You each want to receive a good grade, but you also want to avoid hard work. In particular, here is the situation:• If both of you work hard, you both get an A, which gives each of you 40 units of happiness.• If only one of you works hard, you both get a B, which gives each of you 30 units of happiness.• If neither of you works hard, you both get a D, which gives each of you 10 units of happiness.• Working hard costs 25 units of happiness. a. Fill in the payoffs in the following decision box: REFER IMAGE b. What is the likely outcome? Explain your answer.c. If you get this classmate as your partner on a series of projects throughout the year, rather than only once, how might that change the outcome you predicted in part (b)?d. Another classmate cares more about good grades: She gets 50 units of happiness for a B and 80 units of happiness for an A. If this classmate were your partner (but your…You and a classmate are assigned a project on which you will receive one combined grade. (You each want to receive a good grade, but you also want to avoid hard work. In particular, here is the situation:• If both of you work hard, you both get an A, which gives each of you 40 units of happiness.• If only one of you works hard, you both get a B, which gives each of you 30 units of happiness.• If neither of you works hard, you both get a D, which gives each of you 10 units of happiness.• Working hard costs 25 units of happiness.a. Fill in the payoffs in the following decision box: b. What is the likely outcome? Explain your answer.c. If you get this classmate as your partner on a series of projects throughout the year, rather than only once, how might that change the outcome you predicted in part (b)?d. Another classmate cares more about good grades: She gets 50 units of happiness for a B and 80 units of happiness for an A. If this classmate were your partner (but your preferences…