Two oligopolistic aluminium manufacturers are engaged in bitter competition with one another. Both firms, Big Aluminium Giant (BAG) and Little Aluminium Giant (LAG), are deciding whether to expand capacity or not. The table below shows payoffs for the firms under various scenarios. The first number in each cell is the payoff of LAG. Suppose the game is played sequentially and LAG make their decision first. What are the payoffs to each firm in the equilibrium of this game? Big Aluminium Giant Don't Expand Expand Little Aluminium Giant Dont Expand Expand 2, 3 1,4 2, 2 3, 1 OA. 2, 3 OB. 3, 1 OC.1,4 OD.2, 2 OE. There is no equilibrium in this game

Two oligopolistic aluminium manufacturers are engaged in bitter competition with one another. Both firms, Big Aluminium Giant (BAG) and Little Aluminium Giant (LAG), are deciding whether to expand capacity or not. The table below shows payoffs for the firms under various scenarios. The first number in each cell is the payoff of LAG. Suppose the game is played sequentially and LAG make their decision first. What are the payoffs to each firm in the equilibrium of this game? Big Aluminium Giant Don't Expand Expand Little Aluminium Giant Dont Expand Expand 2, 3 1,4 2, 2 3, 1 OA. 2, 3 OB. 3, 1 OC.1,4 OD.2, 2 OE. There is no equilibrium in this game

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter15: Oligopoly And Strategic Behavior

Section: Chapter Questions

Problem 14P

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Two oligopolistic aluminium manufacturers are engaged in bitter competition with one another. Both firms, Big Aluminium Giant (BAG) and Little Aluminium Giant (LAG), are deciding whether to expand capacity or not. The table below shows payoffs for the firms under various scenarios. The first number in each cell is the payoff of LAG. Suppose the game is played sequentially and LAG make their decision first. What are the payoffs to each firm in the equilibrium of this game? Big Aluminium Giant Don't Expand Expand Little Aluminium Giant 1, 4 Don't Expand Expand 2, 3 3, 1 2, 2 O A. 2, 3 OB. 3, 1 OC.1, 4 OD. 2, 2 E. There is no equilibrium in this game
Intel and AMD are the two dominant producers of microchip processors. The following matrix gives the payoffs (in millions of dollars) of the two firms for different combinations of their pricing strategies. The first number is Intel's payoff and the second AMD's. AMD Intel Low Price High Price Low Price 35, 30 30, 60 High Price 70,25 65,55 O If this game is played sequentially, the Nash equilibrium will not change irrespective of who moves first. If this one-shot game is repeated for 10 times, the Nash equilibrium is for both firms to choose High Price. O In this game, Pareto criterion leads both firms to choose High Price. This game is an example of coordination game.
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The only two firms in a market are trying to decide what price to charge. The payoff matrix for this duopoly game is shown below. The payoffs are thousands of dollars of economic profit. In the Nash equilibrium, A). Firm A and Firm B are both making $80,000 in economic profit. B). Firm A and Firm B are both making $75,000 in economic profit. C). Firm A is making $80,000 and Firm B is making $75,000 in economic profit. D). Firm A and Firm B are both making $60,000 in economic profit.
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Two oligopolistic aluminium manufacturers are engaged in bitter competition with one another, Both firms, Big Aluminium Giant (BAG) and Little Aluminium Giant (LAG), are deciding whether to expand capacity or not. The table below shows payoffs for the firms under various scenarios. The first number in each cell is the payoff of LAG. Suppose the game is played once and each firm has to make its decision simultaneously. Does BAG have a dominant strategy? Explain clearly. Does LAG have a dominant strategy? Explain clearly. Big Aluminium Giant (BAG) Don't Expand 3, 4 4, 2 Еxpand Little Aluminium Giant Don't Expand 2, 3 Expand 1, 1 For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).
Imagine that there are two snowboard manufacturers (FatSki and WideBoard) in the market. Each firm can either produce ten or twenty snowboards per day. The table below (see attached) shows the profit per snowboard for each firm that will result given the joint production decisions of these two firms. Draw the game payoff matrix for this situation. Does either player have a dominant strategy? If so, what is it? What is the Nash equilibrium solution and how many boards should each player produce each day? Since FatSki and WideBoard must play this game repeatedly (i.e. make production decisions every day), what strategy would you advise them to play in order to maximize their payoff over the long term?
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