Consider the game below: Player C Q-50 Q-100 Q-150 Player R Q-50 37,37 30, 40 20.37 Q-100 40.30 Q-150 32.32 15.25 37.20 25.15 0.0 Where player R's payoff is written first. What is the equilibrium in the game? Select one: a. In equilibrium, both firms choose Q = 50. b. There are two equilibria, associated with the (40,30) payoff and the (30,40) payoff. c. The only equilibrium is in mixed strategies. d. In equilibrium, both firms choose Q = 100.

Consider the game below: Player C Q-50 Q-100 Q-150 Player R Q-50 37,37 30, 40 20.37 Q-100 40.30 Q-150 32.32 15.25 37.20 25.15 0.0 Where player R's payoff is written first. What is the equilibrium in the game? Select one: a. In equilibrium, both firms choose Q = 50. b. There are two equilibria, associated with the (40,30) payoff and the (30,40) payoff. c. The only equilibrium is in mixed strategies. d. In equilibrium, both firms choose Q = 100.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.1P

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Consider the game below: Player R Player C Q-50 Q-100 Q-150 Q-50 37.37 30, 40 20,37 Q-100 40,30 32,32 15.25 Q-150 37,20 25.15 0.0 Where player R's payoff is written first. What is the equilibrium in the game? Select one: O a. In equilibrium, both firms choose Q = 50. b. There are two equilibria, associated with the (40,30) payoff and the (30,40) payoff. The only equilibrium is in mixed strategies. O d. In equilibrium, both firms choose Q = 100.
Consider the game below: Player C Q-50 Q-100 Q-150 Player R Q-50 37.37 30.40 20.37 Q-100 40.30 32.32 15.25 Q-150 37.20 25.15 0.0 Where player R's payoff is written first. What is the equilibrium in the game? Select one: a. In equilibrium, both firms choose Q = 50. O b. There are two equilibria, associated with the (40,30) payoff and the (30,40) payoff. O c. The only equilibrium is in mixed strategies. d. In equilibrium, both firms choose Q = 100.
Little Kona is a small coffee company that is considering entering a market dominated by Big Brew. Each company’s profit depends on whether Little Kona enters and whether Big Brew sets a high price or a low price:a. Does either player in this game have a dominant strategy?b. Does your answer to part (a) help you figure out what the other player should do?c. What is the Nash equilibrium? Is there only one?d. Big Brew threatens Little Kona by saying, “If you enter, we’re going to set a low price, so you had better stay out.” Do you think Little Kona should believe the threat? Why or why not?c. If the two firms could collude and agree on how to split the total profits, what outcome would they pick?
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