EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 13.A, Problem 1ARQ
To determine
How collusive agreements can be established and maintained.
Expert Solution & Answer
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Students have asked these similar questions
4. Consider a three-player bargaining, where the players are negotiating over
a surplus of one unit of utility. The game begins with player 1 proposing
a three-way split of the surplus. Then player 2 must decide whether to
accept the proposal or to substitute for player 1's proposal his own alternative
proposal. Finally, player 3 must decide whether to accept or reject current
proposal (it is player 1's if player 2 accepts or player 2's if player 2 offer a
new one). If he accepts, then the players obtain the specified shares of the
surplus. If player 3 rejects, then the players each get 0.
(a) Draw the extensive form game of this perfect-information game.
(b) Determine the subgame perfect NE.
18. Answer the next question based on the payoff matrix for a two-firm oligopoly where the
numbers represent the firms' respective profits given each of their pricing strategies:
FIRM Y
O $ 800,000
O $1,000,000
O $1,450,000
Strategies:
High-price
If both firms collude to maximize joint profits,
O $1,250,000
FIRM X
High-price
X = $625,000
Y = $625,000
Low-price X = $275,000
Y = $725,000
Low Price
X = $725,000
Y = $275,000
X = $400,000
Y = $400,000
tal profits for the two firms will be:
3. Consider a two-player, sequential-move game where each player can choose to play right or
left. Player 1 moves first. Player 2 observes player 1's actual move and then decides to move
right or left. If player 1 moves right, player 1 receives £20 and player 2 receives £45. If both
move left, player 1 receives £15 and player 2 receives £30. If player 1 moves left and player 2
moves right, player 1 receives £40 and player 2 receives £40.
a.
Draw the above situation in the form of an extensive form game.
b. Find the sub-game perfect Nash equilibrium of the extensive form game.
Chapter 13 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Ch. 13.1 - Prob. 1QQCh. 13.1 - Prob. 2QQCh. 13.1 - Prob. 3QQCh. 13.1 - Prob. 4QQCh. 13.4 - Prob. 1QQCh. 13.4 - The D2e segment of the demand curve D2eD1 graph...Ch. 13.4 - Prob. 3QQCh. 13.4 - Prob. 4QQCh. 13.A - Prob. 1ADQCh. 13.A - Prob. 2ADQ
Ch. 13.A - Prob. 3ADQCh. 13.A - Prob. 4ADQCh. 13.A - Prob. 1ARQCh. 13.A - Prob. 2ARQCh. 13.A - Prob. 3ARQCh. 13.A - Prob. 1APCh. 13.A - Prob. 2APCh. 13 - Prob. 1DQCh. 13 - Prob. 2DQCh. 13 - Prob. 3DQCh. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - Prob. 6DQCh. 13 - Prob. 7DQCh. 13 - Prob. 8DQCh. 13 - Prob. 9DQCh. 13 - Prob. 10DQCh. 13 - Prob. 11DQCh. 13 - Prob. 12DQCh. 13 - Prob. 13DQCh. 13 - Prob. 1RQCh. 13 - Prob. 2RQCh. 13 - Prob. 3RQCh. 13 - Prob. 4RQCh. 13 - Prob. 5RQCh. 13 - Prob. 6RQCh. 13 - Prob. 7RQCh. 13 - Prob. 8RQCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3P
Knowledge Booster
Similar questions
- 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.arrow_forward5. The following represents the payoffs in a one period game in prices HI and LO. A HI LOW B HI (100, 100) (200,0) LOW (0, 200) (50, 50) (a) If A and B were playing this game only once, what strategy should A choose, and why? (b) A and B are playing the same game an infinite number of times and each has a discount rate of 50% (.50). Firm B adopts a trigger strategy and selects HI in the first round. What would be A's present value of profits from cooperation (HI)? What would be its present value from cheating (LO)? Would A choose to cooperate or cheat?arrow_forwardConsider a new card game between 2 players: Michael (player 1) and Phyllis (player 2) Michael is dealt two cards : O7 and 8. Phyllis is also dealt two cards: 09 and 10. Now, each of the players will play 1 card both at the same time. The payoff of Michael is 8 points if he plays a card of opposite color (red/black) than Phyllis, and otherwise his payoff is 10 points. The payoff of Phyllis is 1 points if the difference of the already played card numbers is smaller than 4, otherwise her payoff is 5 points. 1. Find the action sets of each player and the action profile of the game. 2. Represent the game in the Normal form. 3. Find the Best Responses for Michael. 4. Find the Best Responses for Phyllis. 5. Find all the Nash Equilibriums of the game (if any).arrow_forward
- QUESTION 8 Player 1 chooses between Up and Down. Player 2 observes this, then chooses between Up and Down herself. If both players choose the same action, they both get a payoff of 1. If they choose different actions, the player with Up gets 1 and the player with Down gets -1. How many (pure strategy) Nash equilibria are there in this game? O 3 O 4 QUESTION 9 In the Bertrand model, suppose that each firm has a marginal cost of £10 and that firm 1 sets a price of £9.99, which of the following a best-response for firm 2? Click all the correct answers. O £9.99 O £10.01 O £11.01 O £10.00 O £9.98 QUESTION 10 In the Lindahl model, if player 1 is honest and player 2 maximises his utility which of the following is true: O Player 2 has a higher utility than if both players had been honest. O The level of public good provided is more than that implied by the Samuelson rule. O Player 1 consumes more public goods than player 2.arrow_forwardWal-Mart's dominant strategy is to pick a price of $. Target Price = $30 Price = $17 %3D What is the Nash equilibrium for this game? $6,000 $1,500 O A. The Nash equilibrium is for Target to choose a price of $17 and Wal-Mart to choose a price of $30. Price = $30 $6,000 $11,000 O B. The Nash equilibrium is for Target and Wal-Mart to both choose a price of $30. Wal - Mart C. The Nash equilibrium is for Target to choose a price of $30 and Wal-Mart to choose a price of $17. $11,000 $4,500 Price = $17 %3D $1,500 $4,500 O D. The Nash equilibrium is for Target and Wal-Mart to both choose a price of $17. South OE. O E. A Nash equilibrium does not exist for this game.arrow_forwardTeam 2 plays A Team 2 plays B Team 1 plays A 0, 24 10, 10 Team 1 plays B 4, 4 24, 0 Consider the infinitely repeated version of the game above. Which of the following is the smallest discount factor such that the grim trigger strategy under which team 1 plays A and team 2 plays B until a team deviates, after which team 1 plays B forever and team 2 plays A forever is a Nash Equilibrium? O 1/2 O3/4 O 1/100arrow_forward
- ) Imagine two Silicon Valley entrepreneurs, Andrew and Tyler. An- Question 7 drew produces a microchip set that he can sell to any computer manufacturer for $700. Tyler has a software package that can retail for $300. The two meet and realize that their products are ideally suited for each other and that, with a bit of trivial tinkering, they can produce a combined system of hardware and software worth $3,000 in each computer. Find the players' relative bargaining strengths, if the actual division of revenue have left each player with a profit of $1,500.arrow_forwardSuppose rules of the scenario change such that Villagel and Village2 are having a conflict on the ownership of this stream of nearby river. If both villages decide not to battle against each other, V1 will receive a monetary gain of 20S while V2 will receive a monetary gain of 50S. However, if both decide to battle, there is no monetary gain for both. If V1 decides to attach V2 but V2 stays neutral, V1 receives a gain of 80$ while V2 gets 60S. V2 will get 80S if it attacks V1 and in return V1 does not attack. In this scenario, V1's monetary gain would be just 10$. You are required to construct the pay-off matrix of this scenario.arrow_forwardSuppose 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 No, there is no dominant strategy for Firm A. O The dominant strategy for Firm A is a high price. b. Does Firm B have a dominant strategy? O The dominant strategy for Firm B is a low price. O The dominant strategy for Firm B is a high price. O No, there is no dominant strategy for Firm B. Firm A Low Price Firm A High Pricearrow_forward
- 4. The following payoff matrix shows the profit payoff to firms A and B from combinations of price strategies HI and LO. A НІ LOW B HI (6, 6) (16, -5) LOW (-7, 15) (0, 0) (a) In a one period game, what strategy would each firm follow, and why? Determine the equilibrium on the one-period game. (b) Now assume the game is infinite in length. Firm B goes HI in period 1 and continues with HI so long as A does as well. Firm A is deciding between HI and LO. Determine the range of discount rates for which HI is the better choice for Firm A.arrow_forwardSuppose 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. 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…arrow_forwardAssume Waterland and Aquataste make a nonbinding, informal agreement that each will produce 250 gallons of water, charge $1.50 per gallon, and evenly split the profit of $750. If Aquataste reneges on the agreement and produces 350 gallons, Waterland has an incentive to renege on the agreement by producing 350 gallons because Waterland’s profits would increase to $_____ , which is better than the $312.50 Waterland would earn by sticking with the agreement. (Provide your answer to two decimal places.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
![Text book image](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education