You are the manager of the ABC novelty store,and your only competitor is the XYZ novelty store.You are both trying to decide on which magic tricks and party favors to carry in stock.The product mixes available to both of you are low,medium,and high in variety.Your expected earnings in this market are shown in the following table: \[\begin{array}{c} \text { Firm XYZ }\\ \text { Firm ABC } \begin{array} { | l | l | l | l | } \hline \text { Strategy } & \text { Low } & \text { Medium } & \text { High } \\ \hline \text { Law } & 100,100 & 150,200 & 200,300 \\ \hline \text { Medium } & 200,75 & 125,150 & 225,195 \\ \hline \text { High } & 300,200 & 100,225 & 150,250 \\ \hline \end{array} \end{array}\] a.Find the Nash equilibrium (or equilibria)for a simultaneous-move,one-shot play of this game. b.What outcome would you expect in this one-shot game? Why?

a.The only Nash equilibrium is that firm

Refer to the following game. $\begin{array}{l} \quad\quad\quad\quad\quad\text { Firm B }\\ \text { Firm A} \begin{array}{|l|l|l|} \hline & \text {Low Price } & \text { High Price } \\ \hline \text { Low Price } & (9,10) & (8,15) \\ \hline \text { High Price } & (7,-10) & (11,11) \\ \hline \end{array}\end{array}$ What are the Nash equilibrium strategies for firm A and firm B respectively?

A) (low price, low price) B) (high price, high price) C) (low price, high price) D) (low price, low price) and (high price, high price) A) (low price, low price) B) (high price, high price) C) (low price, high price) D) (low price, low price) and (high price, high price)

Refer to the normal-form game of advertising shown below. $\begin{array}{c} \quad\quad\quad\quad\quad\quad\text { Firm B}\\ \text { Firm A } \begin{array}{|l|l|l|} \hline & \text { Advertise } & \begin{array}{l} \text { Do Not } \\ \text { Advertise } \end{array} \\ \hline \text { Advertise } & \$ 0, \$ 0 & \$ 175, \$ 10 \\ \hline \begin{array}{l} \text { Do Not } \\ \text { Advertise } \end{array} & \$ 10, \$ 175 & \$ 125, \$ 125\\ \hline \end{array}\end{array}$ Suppose there is a 10 percent chance that the advertising game depicted in Figure 10-17 will end next period.What is the present value to firm A of agreeing to the strategy {do not advertise,do not advertise}?

A) $125 B) $237.50 C) $1,250 D) None of the preceding answers is correct. A) $125 B) $237.50 C) $1,250 D) None of the preceding answers is correct.

The following provides information for a one-shot game. $\begin{array}{l} \quad\quad\quad\quad\quad\quad\text { Firm B}\\ \text { Firm A} \begin{array}{|l|l|l|} \hline &\text { Low Price } & \text { High Price }\\ \hline & & \\ \text { Low Price } & (2,2) & (10,-8)\\ \hline & & \\ \text { High Price } & (-8,10) & (15,15)\\ \hline \end{array}\end{array}$ What are secure strategies for firm A and firm B respectively?

A) (low price, low price) B) (high price, low price) C) (high price, high price) D) Neither firm has a secure strategy. A) (low price, low price) B) (high price, low price) C) (high price, high price) D) Neither firm has a secure strategy.

Exam 10: Game Theory: Inside Oligopoly

You are considering entering a market serviced by a monopolist.You currently earn $0 economic profits,while the monopolist earns $5.If you enter the market and the monopolist engages in a price war,you will lose $5 and the monopolist will earn $1.If the monopolist doesn't engage in a price war,you will each earn profits of $2. a.Write out the extensive form of the above game. b.There are two Nash equilibria for the game.What are they? c.Is there a subgame perfect equilibrium? d.If you were the potential entrant,would you enter? Explain why or why not.

(Essay)

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Question 21

Which of the following is NOT an important determinant of collusion in pricing games?

(Multiple Choice)

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Question 22

According to various trade publications,over 200,000 changes are made in airfares each day.Why do you think this is the case?

(Essay)

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Question 23

You operate in a duopoly in which you and a 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 $3.If you charge different prices,the one charging the higher price loses $5 and the one charging the lower price makes $5. a.Find the Nash equilibrium for a one-shot version of this game. b.Now suppose the game is infinitely repeated.If the interest rate is 10 percent,can you do better than you could in a one-shot play of the game? c.Explain how "history" affects the ability of firms in this game to achieve an outcome superior to that of the one-shot version of the game.

(Essay)

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Question 24

Two firms produce identical products at zero cost,and they compete by setting prices.If each firm charges a low price,then both firms earn profits of zero.If each firm charges a high price,then each firm earns profits of $30.If one firm charges a high price and the other firm charges a low price,the firm that charges the lower price earns profits of $50 and the firm charging the higher price earns profits of zero. a.Which oligopoly model best describes this situation? b.Write this game in normal form. c.Suppose the game is infinitely repeated.Can the players sustain the "collusive outcome" as a Nash equilibrium if the interest rate is 50 percent?

(Essay)

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Question 25

You are the manager of the ABC novelty store,and your only competitor is the XYZ novelty store.You are both trying to decide on which magic tricks and party favors to carry in stock.The product mixes available to both of you are low,medium,and high in variety.Your expected earnings in this market are shown in the following table: Firm XYZ Firm ABC Strategy Low Medium High Law 100,100 150,200 200,300 Medium 200,75 125,150 225,195 High 300,200 100,225 150,250 a.Find the Nash equilibrium (or equilibria)for a simultaneous-move,one-shot play of this game. b.What outcome would you expect in this one-shot game? Why?

(Essay)

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Question 26

Consider the following innovation game: Firm A must decide whether or not to introduce a new product.Firm B must decide whether or not to clone firm A's product.If firm A introduces and B clones,then firm A earns $1 and B earns $10.If A introduces and B does not clone,then A earns $10 and B earns $2.If firm A does not introduce,both firms earn profits of 0.Which of the following is true?

(Multiple Choice)

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Question 27

Refer to the following game. Firm B Firm A Low Price High Price Low Price (9,10) (8,15) High Price (7,-10) (11,11) What are the Nash equilibrium strategies for firm A and firm B respectively?

(Multiple Choice)

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Question 28

Which of the following is NOT an important determinant of collusion in pricing games?

(Multiple Choice)

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Question 29

Which of the following are important determinants of collusion in pricing games?

(Multiple Choice)

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Question 30

A Nash equilibrium with a noncredible threat as a component is:

(Multiple Choice)

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Question 31

Which of the following is true?

(Multiple Choice)

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Question 32

Refer to the normal-form game of advertising shown below. Firm B Firm A Advertise Do Not Advertise Advertise \ 0,\ 0 \ 175,\ 10 Do Not Advertise \ 10,\ 175 \ 125,\ 125 Suppose there is a 10 percent chance that the advertising game depicted in Figure 10-17 will end next period.What is the present value to firm A of agreeing to the strategy {do not advertise,do not advertise}?

(Multiple Choice)

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Question 33

Consider the following information for a simultaneous move game: If you advertise and your rival advertises,you each will earn $5 million in profits.If neither of you advertises,you will each earn $10 million in profits.However,if one of you advertises and the other does not,the firm that advertises will earn $15 million and the non-advertising firm will earn $1 million.If you and your rival plan to hand your business down to your children (and this "bequest" goes on forever),then a Nash equilibrium when the interest rate is zero is:

(Multiple Choice)

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Question 34

There are two existing firms in the market for computer chips.Firm A knows how to reduce the production costs for the chip and is considering whether to adopt the innovation or not.Innovation incurs a fixed setup cost of C,while increasing the revenue.However,once the new technology is adopted,another firm,B,can adopt it with a smaller setup cost of C/2.If A innovates and B does not,A earns $20 in revenue while B earns $0.If A innovates and B does likewise,both firms earn $15 in revenue.If neither firm innovates,both earn $5.If C = 15,which is the perfect equilibrium of the game?

(Multiple Choice)

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Question 35

Consider the following entry game: Here,firm B is an existing firm in the market,and firm A is a potential entrant.Firm A must decide whether to enter the market (play "enter")or stay out of the market (play "not enter").If firm A decides to enter the market,firm B must decide whether to engage in a price war (play "hard"),or not (play "soft").By playing "hard," firm B ensures that firm A makes a loss of $1 million,but firm B only makes $1 million in profits.On the other hand,if firm B plays "soft,",the new entrant takes half of the market,and each firm earns profits of $5 million.If firm A stays out,it earns zero while firm B earns $10 million.Which of the following are Nash equilibrium strategies?

(Multiple Choice)

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Question 36

Which of the following is NOT true?

(Multiple Choice)

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Question 37

The following provides information for a one-shot game. Firm B Firm A Low Price High Price Low Price (2,2) (10,-8) High Price (-8,10) (15,15) What are secure strategies for firm A and firm B respectively?

(Multiple Choice)

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Question 38

Which of the following is a factor(s)affecting collusion in an infinitely repeated pricing game?

(Multiple Choice)

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Question 39

Game theory suggests that,in the absence of patents,the privately motivated innovation decisions of firms might lead to:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 142

Which of the following is NOT an important determinant of collusion in pricing games?

According to various trade publications,over 200,000 changes are made in airfares each day.Why do you think this is the case?

Refer to the following game. Firm B Firm A Low Price High Price Low Price (9,10) (8,15) High Price (7,-10) (11,11) What are the Nash equilibrium strategies for firm A and firm B respectively?

Which of the following is NOT an important determinant of collusion in pricing games?

Which of the following are important determinants of collusion in pricing games?

A Nash equilibrium with a noncredible threat as a component is:

Which of the following is true?

Which of the following is NOT true?

The following provides information for a one-shot game. Firm B Firm A Low Price High Price Low Price (2,2) (10,-8) High Price (-8,10) (15,15) What are secure strategies for firm A and firm B respectively?

Which of the following is a factor(s)affecting collusion in an infinitely repeated pricing game?

Game theory suggests that,in the absence of patents,the privately motivated innovation decisions of firms might lead to:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

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