View the step-by-step solution to:

The town of Knysna along the Garden route in the Western Cape has two popular diners, Emil's Diner and Bobby Ray's Diner. Both sell only fish pies....

(i) I have attached the question, I need help with creating a 7by7 Payoff Matrix.

(ii) Identify all Nash Equilibria

(iii) suppose that Bobby's Diner is out of business and Emil's is a monopoly. Find Emil's Profit maximizing price.

The town of Knysna along the Garden route in the Western Cape has two popular diners, Emil’s Diner and Bobby Ray’s Diner. Both sell only Fsh pies. Everyone who considers ea±ng at the two Diners is aware that they sell the same ²ish pies and knows the prices that they charge (PE; PBR). At precisely 5:00 pm, each diner simultaneously sets its price of Fsh pie for that evening. The market demand func±on for ²ish pie is Q = 120 – 20p. where p is lower of the two diners prices. If there is a lower priced diner, then people eat Fsh pie at only that diner and the dinner sells 120 – 20p Fsh pies. If the two diners post the same price, then each sells to one half of the market: ½ (120 -20p). Suppose that prices can be quoted in rand units only ( 0,1,2,3,4,5 or 6). Each diner’s marginal cost is R2 and the Fxed cost equal to zero i. Create a 7 x 7 payo³ matrix and Fll in the diners’ proFts ii. Iden±fy all Nash Equilibria. iii. Suppose that Bobby’s Diner is out of business and Emil’s is a monopoly. ²ind Emil’s ProFt maximizing price.
Background image of page 1

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.


Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question