Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the following payoff matrix as they decide upon the size of their research budget: Synergy's Decision Large Budget Small Budget Large Budget $20 million, $25 million $15 million, $0 Dynaco's Decision Small Budget $0, $60 million $25 million, $30 million If Synergy believes Dynaco will go with a large budget, it will choose a v budget. If Synergy believes Dynaco will go with a small budget, it will choose a v budget. Therefore, Synergy a dominant strategy.

Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the following payoff matrix as they decide upon the size of their research budget: Synergy's Decision Large Budget Small Budget Large Budget $20 million, $25 million $15 million, $0 Dynaco's Decision Small Budget $0, $60 million $25 million, $30 million If Synergy believes Dynaco will go with a large budget, it will choose a v budget. If Synergy believes Dynaco will go with a small budget, it will choose a v budget. Therefore, Synergy a dominant strategy.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 13PAE

See similar textbooks

High-tech Industry

please help

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1.

VIEW

Step 2.

VIEW

Step 3.

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

mall Dynaco Jains Pynaco gains 4. Synergy and Dynaco are the only two firms in a specific high - tech industry. They face the following payoff matrix as they determine the size of their research budget: Synergy's Deeision Small Bodget Lange Budget Synergy gain $420M Symedgy Dynaco ins Large budget Dynaro gains $30M Synergy Small Dynaco Jains Budget Jains zero Dynae's 2ero gains $70m Synergy Pynaco gains gains #50M Decision a. Does Synergy have a dominant strategy? Explain. b. Does Dynaco have a dominant strategy? Explain. c. Is there a Nash equilibrium for this scenario? Explain. (Hint: Look closely at the definition of Nash equilibrium.)
Company A and Company B are competing oligopolists. Both companies are considering increasing or maintaining their prices The payoff matrix shows the profits of the companies in millions based on their possible actions. Company B Increase Price Maintain Price Company A Increase Price $50, $40 $35, 530 Maintain Price 555, $45 $60, $35 The government offers a $5 milon subsidy to maintain current pricing. What is the expected outcome of the new payoff matrix, given the subsidy? The Nash equilibrium changes, and both companies will maintain their prices O The Nash equilbrium changes, and both companies will increase their prices O The Nash equilibrium remains the same, and both companies will increase their prices O Company A wit increase its price, whie Company B maintains its price. O Company A will maintain its price, while Company Bincreases ts price.
You are playing a game with a friend. It’s yourmove but you don’t have a dominant strategy.Your payoff depends on what your friend doesafter your move. You consider flipping a coin todecide what to do. You are about to reach for acoin, but then you realize that your friend has adominant strategy. Explain how using backwardinduction (rather than a coin toss) will now determine your next move
Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the following payoff matrix as they decide upon the size of their research budget: Dynaco's Decision Synergy's Decision Large Budget Large Budget $40 million, $30 million Small Budget $0, $30 million If Synergy believes Dynaco will go with a large budget, it will choose a ▼ budget. If Synergy believes Dynaco will go with a small budget, it will choose a budget. Therefore, Synergy a dominant strategy. True Small Budget $60 million, $0 $50 million, $40 million If Dynaco believes Synergy will go with a large budget, it will choose a budget. If Dynaco believes Synergy will go with a small budget, it will choose a budget. Therefore, Dynaco a dominant strategy. O False True or False: There is a Nash equilibrium for this scenario. (Hint: Look closely at the definition of Nash equilibrium.)
II.2 Companies A and B can compete on advertising or R&D. The profits (in millions of $ million) of the two firms are given in the table below assumig that they play a one-shot simultancous mov game (the profit or firm A is listed first in every cell of the matrix, followed by the profit of firm B): Advertising R&D 50, 25 10, 70 20, 40 60, 35 1. Find the mixed strategy equilibrium. A\B Advertising R&D 2. What are the expected profits for both firms in this equilibrium?
Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the following payoff matrix as they decide upon the size of their research budget: Dynaco's Decision Synergy's Decision Large Budget Large Budget $30 million, $20 million Small Budget $0, $30 million If Synergy believes Dynaco will go with a large budget, it will choose a budget. If Synergy believes Dynaco will go with a small budget, it will choose a budget. Therefore, Synergy a dominant strategy. O True Small Budget $70 million, $0 $50 million, $40 million If Dynaco believes Synergy will go with a large budget, it will choose a budget. If Dynaco believes Synergy will go with a small budget, it will choose a budget. Therefore, Dynaco a dominant strategy. O False True or False: There is a Nash equilibrium for this scenario. (Hint: Look closely at the definition of Nash equilibrium.)
Please look at the payoff matrix below which shows the benefits that would accrue to each player in a 2-player.non-sequential, non-repeated game. a) Identify the collusive (cooperative) equilibrium. b) Identify the secure strategy (maximin) equilibrium c) Identify the maximax equilibrium d) Identify the Nash equilibrium Apple Inc. Strategy 1 Strategy 2 Strategy 3 20 40 60 60 1000 200 Strategy A 70 50 90 Banana Inc. 400 70 300 Strategy B 40 80 100 90 150 80 Strategy C
8. To advertise or not to advertise Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Creamland Dairy King Advertises Doesn't Advertise 9,9 Doesn't Advertise 3, 15 Advertises 15, 3 11, 11 For example, the upper-right cell shows that, if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $15 million, and Dairy King will make a profit of $3 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. If Creamland decides to advertise, it will earn a profit of $ not advertise. If Creamland decides not to advertise, it will earn a profit of $ does not advertise. million if Dairy King advertises and a profit of $ If Dairy King advertises, Creamland makes a higher profit if it chooses million if Dairy King advertises and a profit of $…
12. To advertise or not to advertise Suppose that two firms, Hatte Latte and Bean Bruuer, are the only sellers of espresso in some hypothetical market. The following payoff matrix gives the profit (in millions of dollars) earned by each company depending on whether or not it chooses to advertise: Bean Bruuer Advertise Doesn't Advertise Advertise Hatte Latte Doesn't Advertise 9,9 3,15 15,3 11, 11 For example, the lower left cell of the matrix shows that if Bean Bruuer advertises and Hatte Latte does not advertise, Bean Bruuer will make a profit of $15 million, and Hatte Latte will make a profit of $3 million. Assume this is a simultaneous game and that Hatte Latte and Bean Bruuer are both profit-maximizing firms. If Hatte Latte chooses to advertise, it will earn a profit of $ does not advertise. million if Bean Bruuer advertises and a profit of $ million if Bean Bruuer If Hatte Latte chooses not to advertise, it will earn a profit of $ does not advertise. million if Bean Bruuer…
Save Answer Consider two cigarette companies, PM Inc. and Brown Inc. If neither company advertises, the two companies spit the market and earn $60 million each. If they both advertise, they again split the market, but profits are lower by $20 million since each company must bear the cost of advertisirlg. Yet if one company advertises while the other does not, the one that advertises attracts customers from the other. In this case, the company that advertises earns $70 million while the company that does not advertise earns only $30 million. What will these two companies do if they behave as individual profit maximizers? Neither company will advertise, and PM Inc. earns $60. One company will advertise, the other will not. Brown Inc. earns $70. Both companies will advertise, and PM Inc. earns $40. Both companies will advertise, and PM Inc. earns $60.
The U.S. government has decided to build a new off ramp for Interstate 5 in California. Exxon and Shell are both interested in building a gas station near the new off ramp. They can build the gas station near the off ramp for northbound traffic or they could build the gas station near the off ramp for southbound traffic. The profits for each outcome are illustrated in the accompanying payoff table: Shell Shell northbound southbound Exxon receives Exxon receives $60,000 profit $110,000 profit Exxon northbound Shell receives Shell receives $50,000 profit $100,000 profit Exxon receives Exxon receives $80,000 profit $50,000 profit Exxon southbound Shell receives Shell receives $120,000 profit $50,000 profit a. Select the Nash equilibrium, or equilibria, that occur if Exxon and Shell make these decisions simultaneously. Exxon builds southbound and Shell builds southbound. Exxon builds northbound and Shell builds southbound.
The U.S. government has decided to build a new off ramp for Interstate 5 in California. Exxon and Shell are both interested in building a gas station near the new off ramp. They can build the gas station near the off ramp for northbound traffic or they could build the gas station near the off ramp for southbound traffic. The profits for each outcome are illustrated in the accompanying payoff table: Shellnorthbound Shellsouthbound Exxon northbound Exxon receives$60,000 profitShell receives$50,000 profit Exxon receives$110,000 profitShell receives$100,000 profit Exxonsouthbound Exxon receives$80,000 profitShell receives$120,000 profit Exxon receives$50,000 profitShell receives$50,000 profit a. Select the Nash equilibrium, or equilibria, that occur if Exxon and Shell make these decisions simultaneously. Exxon builds northbound and Shell builds northbound. Exxon builds southbound and Shell builds northbound. Exxon builds southbound and Shell builds southbound.…