Q4: 444 Suppose a town only has two (2) petrol stations, United and BP. Each could...
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Q4: 444 Suppose a town only has two (2) petrol stations, United and BP. Each could choose to charge a high price or low price, as shown in the matrix below. United United charges a low price: United charges a high price: BP charges a low price: BP has low profit; United has low profit . BP has high profit; United has no profit BP BP charges a high price: BP has no profit; United has high profit BP has average profit; United has average profit (a) What is the dominant strategy (i.e. a Nash equilibrium) for the above matrix? Explain briefly. TIME (b) If the two (2) petrol stations could collude, what would be the likely strategy? Explain briefly. (c) (This sub-question is not related to the above questions.) Briefly explain the principles of the 'kinked' demand curve by using an example such as pricing a product by the two (2) supermarket giants. ( Q4: 444 Suppose a town only has two (2) petrol stations, United and BP. Each could choose to charge a high price or low price, as shown in the matrix below. United United charges a low price: United charges a high price: BP charges a low price: BP has low profit; United has low profit . BP has high profit; United has no profit BP BP charges a high price: BP has no profit; United has high profit BP has average profit; United has average profit (a) What is the dominant strategy (i.e. a Nash equilibrium) for the above matrix? Explain briefly. TIME (b) If the two (2) petrol stations could collude, what would be the likely strategy? Explain briefly. (c) (This sub-question is not related to the above questions.) Briefly explain the principles of the 'kinked' demand curve by using an example such as pricing a product by the two (2) supermarket giants. (
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a The dominant strategy or Nash equilibrium in this matrix is for both petrol stations to charge a h... View the full answer
Related Book For
Financial Management for Public Health and Not for Profit Organizations
ISBN: 978-0132805667
4th edition
Authors: Steven A. Finkler, Thad Calabrese
Posted Date:
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