Practice Quiz11

Principles of Macroeconomics

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Econ 101: Principles of Microeconomics NAME: Korinna K. Hansen Disc. Section: Practice Quiz 11 Consider the following payoff matrix for an oligopoly consisting of two firms, Company A and Company B: Company B chooses: Low price High price Low price Company A: $10 million Company A: $30 million Company B: $10 million Company B: $20 million Company A chooses: High price Company A: $20 million Company A: $15 million Company B: $30 million Company B: $15 million a). Does Company A have a dominant strategy?
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Unformatted text preview: If there is no collusion, what is the best policy for Company A to follow? Explain briefly. b). Does Company B have a dominant strategy? If there is no collusion, what is the best policy for Company B to follow? Explain briefly. c). Could these companies benefit from collusion? If no, why not? If yes, explain how this collusion would work and determine the monetary gains from collusion....
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