Practice+Final+1_Solution

Ifsounderwhatcircumstancescanthese

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Unformatted text preview: in.
 
 QQUARTER
 QDIME
 Market
Price
 PROFITSQUARTER
 PROFITSDIME
 50
 40
 2000
 2000
 50
 60
 
 
 
 50
 80
 
 
 
 60
 50
 
 
 
 60
 60
 30
 1800
 1800
 60
 80
 
 
 
 80
 50
 
 
 
 80
 60
 20
 1600
 1200
 80
 
 50
 80
 
 
 
 
 2
 
 
 Firms
and
Markets

 Spring
2010
 Final
Exam
 
 
 
 
 
 
 
 a) [8
points]
Represent
the
competition
between
Quarter
Inc.
and
Dime
Inc.
as
a
 normal‐form
game,
and
draw
and
fill
out
the
payoff
matrix.
 (HINTS:

Use
the
chart
on
the
previous
page
to
help
you
compute
all
payoffs.

 Also,
it
may
be
useful
to
note
that
the
firms
are
symmetric.)
 
 
 
 
 
 
 
 
 
 Dime
Inc.
 
 50
 60
 80
 50
 2000,2000
 1750,2100
 1250,2000
 Quarter
Inc.
 60
 2100,1750
 1800,1800
 1200,1600
 80
 2000,1250
 1600,1200
 800,800
 
 
 Minus
1
for
failing
to
label
players.
 Minus
1
for
failing
to
label
strategies
appropriately.
 Take
off
up
to
negative
2
points
for
numerical
errors
when
computing
payoffs.
 
 
 
 
 
 
 b) [4
points]
Does
any
firm
have
a
dominant
strategy?
If
so,
which
one?
Does
any
 firm
have
any
dominated
strategies?
If
so,
list
them
and
say
what
other
 strategies
dominate
them.
 
 
 [2
points]
No
firm
has
a
dominant
strategy.
 [2
points]
80
tons
is
a
dominated
strategy
for
both
firms.
80
tons
is
dominated
by
 60
tons.
 [Take
off
1
point
of
they
get
the
dominated
strategy
right,
but
don’t
know
which
 strategy
it
is
dominated
by]

 
 [If
payoff
table
was
incorrect,
but
answers
are
perfect
given
the
payoff
table,
 take
off
only
...
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This document was uploaded on 03/09/2014 for the course BUS 01 at NYU.

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