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Unformatted text preview: produce, and what price will they charge? 1 2. There are 2 firms in an industry. Firm A has two possible options: left or right. Firm B has two possible options: top or bottom. The payoff matrix is given below. Firm A Left Right Firm B Top A’s profit: $500 B’s profit: $1,000 A’s profit: $600 B’s profit: $600 Bottom A’s profit: $300 B’s profit: $800 A’s profit: $400 B’s profit: $700 a. What is Firm A’s dominant strategy? What is Firm B’s dominant strategy? b. Is there a Nash equilibrium of this game? If so, what is it? 2...
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- Spring '12
- Game Theory, market demand curve, Practice Final Exam, possible options