Calculate all dominant strategies

Assignment Help Business Management
Reference no: EM1369378

Economics

Best Buy (B) and Circuit City (C) are competitors in the consumer electronics market. Both have relatively large margins on plasma TV's. Essentially, they have driven up the price of such TV's well above marginal costs because consumers of these TVs tend to be wealthy, and thus tend to have less time, and thus tend to be less price sensitive. However, some consumers will shop around and thus each Firm could steal business from the other by cutting prices.

Circuit City
Hold and match prices Cut prices
Best Buy Hold and match prices B=8, C=8 B=4, C=10
Cut prices B=10, C=4 B=6, C=6

a. Calculate all (if any) dominant strategies.

b. Calculate all (if any) Nash equilibria. For each calculate the profits for each firm.

c. Rank all of the payoffs from highest to lowest social benefit. Does the Nash equilibrium correspond to the highest social benefit? Why or why not?

d. Suppose both firms introduce a price matching policy. Calculate the new payoff matrix and repeat (a) and (b).

Reference no: EM1369378

Questions Cloud

Explain why firms make zero economic profits in economy : assuming economy is in a long run equilibrium, show fraction of total output earned by labour and fraction of total output earned by capital. Explain why, in long run, firms make zero economic profits in this economy.
Evaluate profit maximizing level of coffee output : Evaluate the profit maximizing level of coffee output, the price the cartel should charge, the maximum cartel profits, and the price elasticity at the optimal output.
What is the frequency of the fourth overtone : A horizontal string of length 1.5 meters vibrates with a wave velocity of 1230 m/s at its fundamental frequency.
Explain how would i research the best way to market : Explain How would I research the best way to market a new business like a nail salon
Calculate all dominant strategies : Calculate all dominant strategies and calculate all (if any) Nash equilibria. For each calculate the profits for each firm.
What is the sg of wood : A plate carries a charge of -2.0 microcoulombs while a rod carries a charge of 2.5 microcoulombs. How many electrons should be transferred from the plate to the rod, so that both objects have the equal charge.
Describe how to create users for sales organization unit : Describe how you would create users for sales organization unit and how you can set up user groups in this particular situation (global, universal, domain local).
Determine initial levels of real gdp : In the economy of Cape Despair, subsistence real wage rate is $15 an hour. Whenever real GDP per hour increase above $15 the population grows,
Describe and label substitution effect and income effect : Describe and label substitution effect and income effect. How has welfare of representative consumer in Peru changed with increasing world relative prices.

Reviews

Write a Review

Business Management Questions & Answers

  Create an panas scale using negetive and positive scale

Create an eight item PANAS scale using four positive and four negative scale items to measure your classmates emotions while having taken this BB mid-term exam

  Ways of group leader to manage problem

Provide an example (real or fiction) of such behavior and suggests ways in which a group leader may manage this problem to reduce conflict in the group. Briefly explain.

  What are the major subjects of issue assessments

What are the major subjects of issue assessments-What are the major subjects of issue assessments?

  Analyze individual values and the organizations values

Examine the origins and subsequent evolution of your personal and workplace values and explain how your individual values drive your actions and behaviors, and analyze the alignment between your values and actions and behaviors.

  Deming and technical support

What is Melissa's job not her job description and what might Deming say about this situation?

  Explain bureaucracy in healthcare

Is bureaucracy necessary to deliver effective health care and Why or why not - Is bureaucracy necessary to deliver effective health care?

  Best form of business of business entity

Determine the best form of business of business entity for a business having the following characteristics and explain why you chose that form of business

  Analyzing what learned about leadership from experience

Prepare a reflection where you describe your experience and analyze what you have learned about leadership through your experience.

  What questions would you ask dynamic duos owners

Explain what questions would you ask Dynamic Duo's owners and what legal steps would you recommend that Dynamic Duo take?

  Dissenters in the context of judgmental

Equate the conclusions with the dissenters in the context of judgmental as well as other decision-making biases in a paper of approximately

  Serious psychological damage

Issue of whether an employee must suffer serious psychological damage in order to pursue damages for a claim of sexual harassment?

  Competing effectively in the market for energy drinks

Competing effectively in the market for energy drinks, sports drinks and Vitamin-Enhanced beverages - Enhance PepsiCo's Future Performance

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd