Question

he figure below shows the payoff matrix for two firms, Firm 1
and Firm 2, selecting an advertising budget. **For
each cell, the first coordinate represents Firm 1's payoff and the
second coordinate represents Firm 2's payoff.** The firms
must choose between a high, medium, or low budget.

Payoff Matrix | Firm 1 | |||

High | Medium | Low | ||

Firm 2 | High | (0,0) | (5,5) | (15,10) |

Medium | (5,5) | (10,10) | (5,15) | |

Low | (10,15) | (15,5) | (20,20) |

Use the figure to answer the following questions. Note:
**you only need to submit scratch work for the mixed strategy
calculations.**

This game can be simplified by eliminating strategies that are strictly dominated.

Which budget will Firm 1 never select (High, Medium, or Low)?

Which budget will Firm 2 never select (High, Medium, or
Low)?

There are two pure strategy Nash equilibria in this game. What
are they? **Submit the answers as
coordinates.** For example: (High, Low) represents the
strategy where Firm 1 plays 'High' and Firm 2 plays 'Low'.

Pure Strategy Nash Equilibrium 1:

Pure Strategy Nash Equilibrium 2:

This game also has a mixed strategy. What is the mixed-strategy
Nash equilibrium? **Enter your answers as decimal
numbers, rounding to two digits when needed.**

Firm 1 will set a 'High' budget with probability:

Firm 1 will set a 'Medium' budget with probability:

Firm 1 will set a 'Low' budget with probability:

Firm 2 will set a 'High' budget with probability:

Firm 2 will set a 'Medium' budget with probability:

Firm 2 will set a 'Low' budget with probability:

Answer #1

PAYOFF MATRIX FOR A PRICING GAME
FIRM B
Low Price
High Price
FIRM A
Low Price
(50,000; 50,000)
(80,000; 30,000)
High Price
(30,000; 80,000)
(20,000; 20,000)
From the above payoff matrix where the
payoffs are the profits of the two firms, determine whether:
Firm A has a dominant strategy. If so, what is
it?
Firm B has a dominant strategy. If so, what is it?
The optimal strategy for each firm if there is any.
Will a Nash equilibrium exist...

Fill in a payoff matrix for a prisoner’s dilemma game where one
player has a dominant strategy and the other doesn’t. Firm 2 in
Duopoly Firm 1 in Duopoly
a. Explain the dominant and non-dominant strategy of the
firms.
b. Is there a Nash equilibrium in your game? Explain.

Two firms operate in the market for a certain hair care product.
If they both have a large advertising budget, they each earn profit
of $600. If they both have a low advertising budget, they each earn
profit of $400. If one firm has a large advertising budget and the
other low, then the high advertising firm earns profit of $700
while the low advertising firm earns profit of $200.
Write out the payoff matrix for this game.
Does either...

Using a payoff matrix to determine the equilibrium
outcome
Suppose there are only two firms that sell smart phones,
Flashfone and Pictech. The following payoff matrix shows the profit
(in millions of dollars) each company will earn, depending on
whether it sets a high or low price for its phones.
Pictech Pricing
High
Low
Flashfone Pricing
High
11, 11
2, 18
Low
18, 2
10, 10
For example, the lower, left cell shows that if Flashfone prices
low and Pictech...

Q3) The following matrix shows strategies and payoffs for two
firms that must decide how to price.
(5 Points)
Firm 1
Firm 2
Price High
Price Low
Price High
500, 500
-100, 400
Price Low
400, -100
250, 250
What is the Nash Equilibrium of this game?
Q4) Use the marginal of product of labor to illustrate
graphically the impact of an increase in immigration on employment
and wages. (10 Points)

1. For the following payoff matrix, find these:
a) Nash equilibrium or Nash equilibria (if any)
b) Maximin equilibrium
c) Collusive equilibrium (also known as the "cooperative
equilibrium")
d) Maximax equilibrium
e) Dominant strategy of each firm (if any)
Firm A
Strategy X
Strategy Y
Firm B
Strategy X
200
23
250
20
Strategy Y
30
50
1
500
2. For the following payoff matrix, find these:
a) Nash equilibrium or Nash equilibria...

1) Consider the following game in which two firms decide how
much of a homogeneous good to produce. The annual profit payoffs
for each firm are stated in the cell of the game matrix, and Firm
A's payoffs appear first in the payoff pairs: Firm B - low output
Firm B - high output Firm A - low output 300, 250 200, 100 Firm A -
high output 200, 75 75, 100
a. What are the dominant strategies in this...

Consider the following simultaneous-move, one-shot game facing
two firms (Firm A and Firm B), with the payoffs given in Table I.
Assume the firms are not able to coordinate or communicate. Firm A
and B each has three strategic options.
Table I
Firm B
Firm A
Strategy
Low
average
high
Small
100, 125
300, 200
200, 190
Medium
250, 0
470, 340
480, 300
Large
300, -100
450, 450
475, 360
(a). For each of the firms, identify the dominant...

6. Using a payoff matrix to determine the equilibrium
outcome
Suppose there are only two firms that sell tablets: Padmania and
Capturesque. The following payoff matrix shows the profit (in
millions of dollars) each company will earn, depending on whether
it sets a high or low price for its tablets.
Capturesque Pricing
High
Low
Padmania Pricing
High
11, 11
3, 20
Low
20, 3
10, 10
For example, the lower-left cell shows that if Padmania prices
low and Capturesque prices...

Suppose there are two identical energy firms EnergyCo1 and
EnergyCo2 that behave as competitive duopolies in an energy supply
market. Suppose their marginal cost is given by $12 and the market
demand for energy is given by P=180-Q where Q represents the total
quantity of energy brought to the market by the two firms and P is
the price per unit of energy
1. what are the payoff and reaction functions of EnergyCo1 and
EnergyCo2 in duopoly game? Plot the...

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