1. Your company and your competitors play the game like the following table twice. Suppose your strategy is to set high prices in each period provided your competitors have never charged low prices in the previous period. How much will you produce assuming the interest rate is zero.

For number 1 see the following picture =

    2. As a manager of a chicken restaurant that produces a marginal cost of $ 6 per chicken menu. The chicken restaurant is a local monopoly company near the college (there are no other restaurants near the college). During the day only students eat at the restaurant. In the evening, college employees eat there. If a student has an elasticity of chicken demand of -4 and college employees have an elasticity of demand of -2, what is the pricing policy to maximize profits?

Please explain the answer, Thankyou so much! much appreciated

Transcribed Image Text:

Company B Price High Low Company A Low 0,0 50, -40 High -40, 50 10, 10 Company B Price High Low Company A Low 0,0 50, -40 High -40, 50 10, 10

Answer rating: 100% (QA)

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