14. Company A and Company B are each telecommunications manufacturers. Both companies manufacture the same products, and they make their decisions based on the other's actions. Both companies are considering opening retail outlets to increase their profits. The payoff matrix shows the profits of the companies in millions of dollars if they choose to open retail outlets. The government imposes a new $5 million tax to open retail outlets. What is the expected outcome of the new payoff matrix, given the tax? The Nash equilibrium is for Company A to not open retail outlets and for Company B to open retail outlets. The Nash equilibrium is for Company A to open retail outlets and for Company B to not open retail outlets. The Nash equilibrium is for both Company A and Company B to open retail outlets. The Nash equilibrium is for both Company A and Company B to not open retail outlets. There is no Nash equilibrium after the change given in the scenario.
14. Company A and Company B are each telecommunications manufacturers. Both companies manufacture the same products, and they make their decisions based on the other's actions. Both companies are considering opening retail outlets to increase their profits. The payoff matrix shows the profits of the companies in millions of dollars if they choose to open retail outlets. The government imposes a new $5 million tax to open retail outlets. What is the expected outcome of the new payoff matrix, given the tax? The Nash equilibrium is for Company A to not open retail outlets and for Company B to open retail outlets. The Nash equilibrium is for Company A to open retail outlets and for Company B to not open retail outlets. The Nash equilibrium is for both Company A and Company B to open retail outlets. The Nash equilibrium is for both Company A and Company B to not open retail outlets. There is no Nash equilibrium after the change given in the scenario.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
14.
Company A and Company B are each telecommunications manufacturers. Both companies manufacture the same products, and they make their decisions based on the other's actions. Both companies are considering opening retail outlets to increase their profits. The payoff matrix shows the profits of the companies in millions of dollars if they choose to open retail outlets.
The government imposes a new $5 million tax to open retail outlets. What is the expected outcome of the new payoff matrix, given the tax?
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The Nash equilibrium is for Company A to not open retail outlets and for Company B to open retail outlets.
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The Nash equilibrium is for Company A to open retail outlets and for Company B to not open retail outlets.
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The Nash equilibrium is for both Company A and Company B to open retail outlets.
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The Nash equilibrium is for both Company A and Company B to not open retail outlets.
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There is no Nash equilibrium after the change given in the scenario.
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5. The
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a natural
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a legal monopoly
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productively efficient
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Transcribed Image Text:Company B
Retail outlets No retall outlets
Company A Retail outlets
$25, $25
$30, $15
No retail outlets $35, $35
$34, $20
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