Firm A and Firm B are operating in the high-tech manufacturing industry. Each can choose to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Firm A and Firm B are operating in the high-tech manufacturing industry. Each can choose to go for the high price for a high-quality product (HIGH PRICE) or the low price for a low- quality product (LOW PRICE). Profits (in $ million) are given by the following payoff matrix below in Table 3. Firm A High Price Low Price Firm B High Price $1000, $800 $1100, $1100 Low Price $1200, $900 $300, $400 Table 3 a. Refer to Table 3, discuss the Nash equilibrium outcomes if both firms make their decisions at the same time and follow maximin (low-risk) strategies? Justify your answer. Diagram is NOT required (4 marks) b. Refer Table 3, based on the payoff matrix provided above, in most cases, getting a head start costs money, especially in the telecommunication industry. However, if the managers of both firms are very conservative and suppose both firms try to maximize their profits. Assume that Firm A has a head start in planning, and can commit first. Now, what will the outcome be based on this assumption? What will the outcome be if Firm B has a head start in planning and can commit first? Explain and discuss your answers. Diagram is NOT required. (6 marks) c. Suppose restaurants and cafés are operating in a Monopolistic Competition Market. Explain why the firms will earn zero economic profits in long run. Discuss with a minimum of TWO (2) appropriate diagrams. (8 marks) d. The kinked demand curve is generally common model for the Oligopoly market structure. Explain how the model works. What are its limitations? Why does this model occur in oligopolistic markets? Draw ONE (1) diagram. (6 marks) e. Explain what is the perfect first-degree" and second-degree price discrimination. Suppose a firm can practice price discrimination for their products, what is the best suggestion for a Monopolistic competitive firm to set its policy by maximizing profit. Draw only TWO (2) diagrams. (6 marks) Firm A and Firm B are operating in the high-tech manufacturing industry. Each can choose to go for the high price for a high-quality product (HIGH PRICE) or the low price for a low- quality product (LOW PRICE). Profits (in $ million) are given by the following payoff matrix below in Table 3. Firm A High Price Low Price Firm B High Price $1000, $800 $1100, $1100 Low Price $1200, $900 $300, $400 Table 3 a. Refer to Table 3, discuss the Nash equilibrium outcomes if both firms make their decisions at the same time and follow maximin (low-risk) strategies? Justify your answer. Diagram is NOT required (4 marks) b. Refer Table 3, based on the payoff matrix provided above, in most cases, getting a head start costs money, especially in the telecommunication industry. However, if the managers of both firms are very conservative and suppose both firms try to maximize their profits. Assume that Firm A has a head start in planning, and can commit first. Now, what will the outcome be based on this assumption? What will the outcome be if Firm B has a head start in planning and can commit first? Explain and discuss your answers. Diagram is NOT required. (6 marks) c. Suppose restaurants and cafés are operating in a Monopolistic Competition Market. Explain why the firms will earn zero economic profits in long run. Discuss with a minimum of TWO (2) appropriate diagrams. (8 marks) d. The kinked demand curve is generally common model for the Oligopoly market structure. Explain how the model works. What are its limitations? Why does this model occur in oligopolistic markets? Draw ONE (1) diagram. (6 marks) e. Explain what is the perfect first-degree" and second-degree price discrimination. Suppose a firm can practice price discrimination for their products, what is the best suggestion for a Monopolistic competitive firm to set its policy by maximizing profit. Draw only TWO (2) diagrams. (6 marks)
Expert Answer:
Answer rating: 100% (QA)
a The Nash equilibrium outcome if both firms make decisions simultaneously and follow a maximin stra... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
Two computer firms, A and B, are planning to market network systems for office information management. Each firm can develop either a fast, high-quality system (High), or a slower, low-quality system...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Please Summarize this article about Communicating competitive information,and Applying Game Theory To Managing Price Competition. Pricing Strategies Course -No longer than 400 words. Like any other...
-
Israel We I had been in Israel for two weeks. We were in our church tour bus, late at night, driving through the mountainous desert. The night was black no moon and only a few stars. The only light...
-
Describe four methods used to estimate sales for budgeting purposes.
-
Consider the surface given by x - 4x + y = z. (a) Describe the traces of the surface in z = k. (b) What is the minimum value of k such that z = k intersects the surface. Explain. (c) Find all points...
-
The velocity of a fluid particle moving along a horizontal streamline that coincides with the \(x\) axis in a plane, two-dimensional, incompressible flow field was experimentally found to be...
-
Monterrey Corporation has an existing loan in the amount of $7 million with an annual interest rate of 6.5%. The company provides an internal company-prepared financial statement to the bank under...
-
Question 2 (50 marks) Compute the slope and deflection of the point B in the diagram below. (a) Use the moment-area method. [25 marks] (b) Use the conjugate beam method. [25 marks] Assume P= (1+0.Y)...
-
Fun Silly Toys (FST) produces a number of space themed toys (e.g., astronaut action figures). One of the newer divisions at FST is the board game division, which currently produces and sells one...
-
Evaluate I lim (75c) 818
-
Your co-worker has called you in the middle of the night to report all the servers have been compromised and have run out of memory. After some debugging, it seems like the attacker exploited a file...
-
Assuming this class is passed a valid non-negative integer, which statements best describe the following class? (Choose two.) A. It is well encapsulated. B. It is susceptible to a denial of service...
-
Which of the following best protect against denial of service attacks? (Choose three.) A. Close resources with catch blocks. B. Use PreparedStatement instead of Statement. C. Close resources with...
-
Which statement best describes the following method? A. It is not susceptible to any common attacks. B. It is at risk of SQL injection attack only. C. It is at risk of a denial of service attack...
-
Which are true about closing resources to guard against a denial of service attack? (Choose two.) A. The NIO.2 Files.lines() method does not require closing a resource when it is used in a stream...
-
The Dollar to Euro spot exchange rate is $1.5459/1.00, the Dollar to Yen spot exchange rate is $0.0100/1.00, and the Euro to Yen spot exchange rate is 0.006689/1.00. Determine the triangular...
-
The time to assemble the first unit on a production line is 10 hours. The learning rate is 0.94. Approximately how long will it take for the seventh unit to be assembled? The number of hours needed...
-
Suppose you are given the following information about a particular industry: Assume that all firms are identical, and that the market is characterized by perfect competition. a) Find the equilibrium...
-
Suppose that a consumer spends a fixed amount of income per month on the following pairs of goods: a) Tortilla chips and salsa b) Tortilla chips and potato chips c) Movie tickets and gourmet coffee...
-
Suppose that labor is the only variable input to the production process. If the marginal cost of production is diminishing as more units of output are produced, what can you say about the marginal...
-
With diverse patient populations come language translation issues. Medical interpretation is a challenge facing most health organizations. Medical interpretation and translation services are costly....
-
Visit the Hofstede Centre (https://geerthofstede.com/culture-geerthofstede- gert-jan-hofstede/6d-model-of-nationalculture/) and review the scores by country for the various cultural dimensions that...
-
You have been asked to join the hospitals task force for developing a plan to increase the organizations workforce diversity from its current 20% level to 40% over the next 5 years. How does your...
Study smarter with the SolutionInn App