Firm 1 vs. Firm 2 Earnings (Multiple Questions)

anthonydel117

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4 years ago

Firm 1 vs. Firm 2 Earnings (Multiple Questions)

		Firm 2
		High Price	Low Price
Firm 1	High Price	Firm 1 earns $100; Firm 2 earns $100	Firm 1 earns $25; Firm 2 earns $150
	Low Price	Firm 1 earns $150; Firm 2 earns $25	Firm 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: 8^th

Authors: O'Sullivan, Sheffrin, Perez

Read 363 times

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Steve T.

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4 years ago

firms make their decisions simultaneously.

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anthonydel117 Author

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4 years ago

This helped my grade so much

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Steve T.

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4 years ago

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joanne1718

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4 years ago

		Firm 2
		High Price	Low Price
Firm 1	High Price	Firm 1 earns $100; Firm 2 earns $100	Firm 1 earns $25; Firm 2 earns $150
	Low Price	Firm 1 earns $150; Firm 2 earns $25	Firm 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.

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austire

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4 years ago

a payoff matrix.

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wildcat290

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4 years ago

		Firm 2
		High Price	Low Price
Firm 1	High Price	Firm 1 earns $100; Firm 2 earns $100	Firm 1 earns $25; Firm 2 earns $150
	Low Price	Firm 1 earns $150; Firm 2 earns $25	Firm 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.

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Jennyyy

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4 years ago

both have a dominant strategy of choosing a low price.

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wildcat290

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4 years ago

Good timing, thanks!

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david f.

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4 years ago

		Firm 2
		High Price	Low Price
Firm 1	High Price	Firm 1 earns $100; Firm 2 earns $100	Firm 1 earns $25; Firm 2 earns $150
	Low Price	Firm 1 earns $150; Firm 2 earns $25	Firm 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.

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all is normal

austire

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#10

4 years ago

choose the low price strategy.

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rizumidancer

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#11

4 years ago

		Firm 2
		High Price	Low Price
Firm 1	High Price	Firm 1 earns $100; Firm 2 earns $100	Firm 1 earns $25; Firm 2 earns $150
	Low Price	Firm 1 earns $150; Firm 2 earns $25	Firm 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.

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whoohoo8

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#12

4 years ago

both firms choose a low price.

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rizumidancer

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#13

4 years ago

Thank you

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