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wrote...
Posts: 206
3 weeks ago
                                                                   
Firm 2
High PriceLow Price
Firm 1High PriceFirm 1 earns $100; Firm 2 earns $100Firm 1 earns $25; Firm 2 earns $150
Low PriceFirm 1 earns $150; Firm 2 earns $25Firm 1 earns $50; Firm 2 earns $50

Table 12.2


The diagram shown in Table 12.2 describes a game in which:

▸ Firm 1 always decides first, and Firm 2 always decides last.

▸ firms make their decisions simultaneously.

▸ firms must communicate with each other before making a decision.

▸ the firms take turns moving first.
Textbook 
Microeconomics: Principles, Applications, and Tools
Edition: 8th
Authors:
Read 309 times
16 Replies
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wrote...
3 weeks ago
firms make their decisions simultaneously.
wrote...
3 weeks ago
This helped my grade so much
wrote...
3 weeks ago
Perfect
wrote...
3 weeks ago
                                                                   
Firm 2
High PriceLow Price
Firm 1High PriceFirm 1 earns $100; Firm 2 earns $100Firm 1 earns $25; Firm 2 earns $150
Low PriceFirm 1 earns $150; Firm 2 earns $25Firm 1 earns $50; Firm 2 earns $50

Table 12.2


The diagram shown in Table 12.2 is:

▸ a game tree.

▸ a payoff matrix.

▸ a price leadership model.

▸ a profit table.
wrote...
3 weeks ago
a payoff matrix.
wrote...
3 weeks ago
                                                                   
Firm 2
High PriceLow Price
Firm 1High PriceFirm 1 earns $100; Firm 2 earns $100Firm 1 earns $25; Firm 2 earns $150
Low PriceFirm 1 earns $150; Firm 2 earns $25Firm 1 earns $50; Firm 2 earns $50

Table 12.2


In the game shown in Table 12.2, the firms:

▸ will alternate between high price and low price strategies.

▸ both have a dominant strategy of choosing a low price.

▸ do not have a dominant strategy.

▸ both have a dominant strategy of choosing a high price.
wrote...
3 weeks ago
both have a dominant strategy of choosing a low price.
wrote...
3 weeks ago
Good timing, thanks!
wrote...
3 weeks ago
                                                                   
Firm 2
High PriceLow Price
Firm 1High PriceFirm 1 earns $100; Firm 2 earns $100Firm 1 earns $25; Firm 2 earns $150
Low PriceFirm 1 earns $150; Firm 2 earns $25Firm 1 earns $50; Firm 2 earns $50

Table 12.2


In the game shown in Table 12.2, if Firm 1 believes that Firm 2 will choose the high price strategy, Firm 1 should:

▸ choose a strategy at random because Firm 1 cannot control the outcome.

▸ refuse to play the game because Firm 1 will surely lose.

▸ choose the high price strategy.

▸ choose the low price strategy.
all is normal
wrote...
3 weeks ago
choose the low price strategy.
wrote...
3 weeks ago
                                                                   
Firm 2
High PriceLow Price
Firm 1High PriceFirm 1 earns $100; Firm 2 earns $100Firm 1 earns $25; Firm 2 earns $150
Low PriceFirm 1 earns $150; Firm 2 earns $25Firm 1 earns $50; Firm 2 earns $50

Table 12.2


The Nash Equilibrium in the game shown in Table 12.2 is the cell in which:

▸ Firm 2 chooses a low price and Firm 1 chooses a high price.

▸ both firms choose a high price.

▸ Firm 1 chooses a low price and Firm 2 chooses a high price.

▸ both firms choose a low price.
wrote...
3 weeks ago
both firms choose a low price.
wrote...
3 weeks ago
Thank you
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