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Two firms are in the chocolate market. Each can choose to go for the differentiation focused high quality market or the cost focused low quality market. Resulting profits are given by the following payoff matrix:
Firm 2
Firm 1 Low HighLow -20, -30 900, 600High 100, 800 50, 50
a. What outcomes are Nash equilibria?
b. If the managers of both firms are conservative and each follows a maximin (low-risk) strategy, what will be the outcome?
c. What is the cooperative outcome?
d. Which firm benefits most from the cooperative outcome? How much would that firm need to offer the other to persuade it to collude?
The best estimates for the first costs, yearly costs (O&M) and yearly benefits (Energy savings) are given below. However, uncertainty exists about the disposal cost and energy savings. The MARR is 5%; taxes and inflation can be ignored.
Below are hypothetical data for the economy in a particular year. There is no statistical discrepancy. Export 179Capital consumption allowances 79 Government current purchases of G & S 134 Indirect taxes (less subsidies) 76
John receives utility from consuming X and Y as given by the utility function U(X,Y) = XY. The price of X is $9, and the price of Y is $12. a. What is John's MRS (marginal rate of substitution) b. What is the optimal mix (ratio) between X and Y in ..
The Texas Family Assistance Program (a social welfare program) offers cash transfers to low-income families. Suppose that the maximum transfer is $20 for households without income; for each dollar earned, the transfer is reduced by $0.50.
Suppose the price of a Cup O' Soup now rises to $2. Using the diagram from part (a), show the consequences of this change in price. Assume that our student now spend only 30 percent of his income on dining hall meals.
TC= 41,000,000+0.005Q 2 MC= TC/ Q =$500 +0.01Q calculate profit maximizing activity level and optimal profit, and optimal profit as percentage of sales revenue. profit maximization problem
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Jonathan (a monopolist) maximizes profit by producing a quantity of 800 pillows where marginal cost is $2 and average cost is $4. Consumers are willing to pay as high as $10 per pillow when the quantity supplied is 800 pillows.
According to the Wall Street Journal, merger and acquisition activity in the first quarter of 2004 rose to $5.3 billion - an investment level not seen since the second quarter of 2001. Approximately three-fourths of the 78 first-quarter deals occu..
Assume that there are a large number of identical firms in a competitive industry, each with the cost function: TC = 25+4q+q2 a. What is the minimum price at which firms will continue operating in the short run In the long run
Per capita GDP in country A and country B is $10,000. Country A's government creates policies and institutions that result in economic growth of 1.5% per year. Country B's government creates policies and institutions that result in 3% economic gro..
In 1989, the Detroit Free Press and Detroit Daily News (the only daily newspapers in the city) obtained permission to merge under a special exemption from the antitrust laws. The merged firm continued to publish the two newspapers but was operated..
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