Practice+Final+1_Solution

8 firmsandmarkets spring2010 finalexam

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Unformatted text preview: TSQUARTER
 PROFITSDIME
 50
 50
 150
 150
 50
 60
 125
 160
 50
 80
 75
 150
 60
 50
 160
 125
 60
 60
 130
 130
 60
 80
 70
 110
 70
 50
 165
 100
 70
 60
 125
 90
 70
 80
 55
 70
 
 Answer
all
remaining
parts
of
question
1
(e‐g)
using
these
new
profits.
 
 e) [3
points]
Represent
competition
between
Quarter
and
Dime
given
the
changes
 in
the
industry
as
a
normal
form
game,
and
provide
the
complete
payoff
matrix.
 
 
 
 Dime
Inc.
 
 
 50
tons
 60
tons
 80
tons
 50
tons
 150,150
 125,160
 75,150
 Quarter
Inc.
 60
tons
 160,125
 130,130
 70,110
 70
tons
 165,100
 125,90
 55,70
 
 
 Minus
1
for
failing
to
label
players.
 Minus
1
for
failing
to
label
strategies
appropriately.
 Take
off
up
to
negative
2
points
for
errors
when
copying
numbers
from
payoff
table.
 
 
 
 
 
 5
 
 
 Firms
and
Markets

 Spring
2010
 Final
Exam
 
 
 
 
 
 f) 
[4
points]
Does
any
firm
have
dominated
strategies
in
this
new
game?
If
yes,
 state
which
strategies
are
dominated
(and
for
which
player)?
What
does
game
 theory
predict
about
the
outcome
of
this
game?

 
 Dominated
Strategies:
 [1
point]
For
Quarter
Inc:
No
dominated
strategy.
 [1
point]
For
Dime
Inc:
80
is
dominated
by
60.
 Now
2
Nash
equilibria.
 [1
point]

(60
tons,
60
tons)
 [1
point]

(70
tons,
50
tons)
 g) [8
points]
You
are
the
CEO
of
Dime
Inc.
and
your
COO
advises
you
to
make
a
 quick
production
decision
(before
your
competitor)
and
supply
60
tons
in
the
 market
immediately.
He
says
this
will
give
you
a
first
mover
advantage.
Should
 you
liste...
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