PLEASE ANSWER ALL THE QUESTIONS I ASK PLEASE 1) A dominant strategy can be descr
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Question
PLEASE ANSWER ALL THE QUESTIONS I ASK PLEASE
1) A dominant strategy can be described as:
A strategy that once it is adopted a player is prevented from changing because to do so will make them worse off.
A strategy that works best for a player.
A strategy that avoids the worst outcome.
A strategy that always works best regardless of what your rival does.
A strategy that imposes the worst outcome on your rival.
2) In the price leadership model of oligopoly:
The dominant firm sets its output level so as to keep the price in the industry high enough for all firms to earn excess profits.
The dominant firms sets its price so low that all the smaller firms in the industry will be driven out of business.
The dominant firm sets its output level so low as to deliberately cause a shortfall in supply and drive the price up.
The dominant firm sets their output and all the firms set their output levels around that of the dominant firm.
A dominant firm sets its price and the other firms in the industry situate their price around the dominant firm's price.
3) In the above strategic game, which statement is TRUE?
Advertising increases the profits of both Ford and General Motors.
Both Ford and General Motors have mixed strategies.
The Nash equilibrium is for both firms not to advertise.
Both companies are forced into a non-cooperative strategy by the lure of very high profits.
If General Motors does not advertise, then Ford will likely advertise in order to reduce the profits of their rival General Motors.
4) A Nash Equilibrium can be described best as:
A set of strategies that is best for each player.
A set of strategies that avoids the worst outcome for each player.
A strategy that always works best regardless of what your rival does.
A strategy that imposes the worst outcome on your rival.
A set of strategies that once they are adopted prevent each player in the game from changing their strategy by making them worse off if they do.
5) In the above strategic game:
Delta has a dominant strategy to discount.
American has a mixed strategy.
The Nash equilibrium is for both Delta and American to charge full-price.
Delta knows American has an incentive to discount.
Both Delta and American have a dominant strategy to discount.
6) In a non-cooperative oligopoly:
Firms are able to earn very high profits even though they find it difficult to cooperate with their rivals.
Firms find it difficult to cooperate with their rivals but it does not impact on their behavior or the prices and profits that prevail in the industry.
Firms have difficulty earning excess profits because they engage in destructive behavior like price wars that reduces profits for everyone.
The inability to cooperate with their rivals means that the market rather than the sellers set prices in the industry.
The inability to cooperate with their rivals will mean that barriers to entry will eventually diappear.
7) Assume that low profits are better than normal profits, as normal profits result in zero economic profits. In the above strategic game, which statement is FALSE?
Pepsi will keep its price high regardless of what strategy Coke pursues.
The Nash equilibrium is for Coke and Pepsi to keep their prices high.
The above game illustrates that rival games often produce non-cooperative solutions.
Coke will keep its price high regardless of what strategy Pepsi pursues.
In the above game for either Coke or Pepsi there is no incentive to lower their price.
8)
Intel has a dominant strategy to invest.
AMD has a mixed strategy.
Intel realizes that AMD has an incentive to invest.
The Nash solution to the game is for both Intel and AMD to not invest in new capital.
Intel can drive its rival AMD out of business.
9) In the kinked demand curve model of an oligopoly, each firm finds it difficult to change their price because:
The anti-trust laws make cooperation difficult if not impossible.
If they lower their price they believe all their competitors will cut their prices as well, reducing their revenues, and if they raise their price, they believe none of their competitors will raise their prices with them, once again, reducing their revenues.
They are afraid that changing their price will upset their relationships with their customers.
The cost of changing price is high, creating a disincentive to alter prices.
Their products each firm sells are very close substitutes to the products sold by their competitors.
10) In the above prisoner's dilemma game (a rival game no formal cooperation is permitted), where the two prisoners (Prisoner 1 and Prisoner 2) have a choice between two strategies (cooperate and Do Not Confess or do not cooperate and Confess), which statement is TRUE?
Both prisoners are better off in the end by confessing.
Cooperation is difficult because the prisoners are not permitted to formerly cooperate and have an incentive to confess.
The dominant strategy for each prisoner is to cooperate.
The Nash equilibrium is to cooperate.
Demonstrates why rivals cooperate.
A strategy that once it is adopted a player is prevented from changing because to do so will make them worse off.
A strategy that works best for a player.
A strategy that avoids the worst outcome.
A strategy that always works best regardless of what your rival does.
A strategy that imposes the worst outcome on your rival.
Ford Do Not Advertise Advertise General Motors Very High Profits High Profits Do Not Advertise High Profits Low Profits Low Profits Normal Profits Advertise Very High Profits Nomal Profits The payoff matrix for Ford and General Motors from advertising.Explanation / Answer
1. A strategy that always works best regardless of what your rival does.
2. A dominant firm sets its price and the other firms in the industry situate their price around the dominant firm's price.
3. If General Motors does not advertise, then Ford will likely advertise in order to reduce the profits of their rival General Motors.
4. A set of strategies that once they are adopted prevent each player in the game from changing their strategy by making them worse off if they do.
5. Both Delta and American have a dominant strategy to discount. Because when they provide discount then they will either earn high profit or normal profit which is greater as compared to other alternative.
6. Firms are able to earn very high profits even though they find it difficult to cooperate with their rivals.
7. In the above game for either Coke or Pepsi there is no incentive to lower their price.
8. Intel has a dominant strategy to invest because payoff in this scenario is higher as compared to do not invest.
9. If they lower their price they believe all their competitors will cut their prices as well, reducing their revenues, and if they raise their price, they believe none of their competitors will raise their prices with them, once again, reducing their revenues.
10. Cooperation is difficult because the prisoners are not permitted to formerly cooperate and have an incentive to confess. Because if other confess and we don't then years of prison will be very high so they prefer to confess in case they are not permitted to cooperate.
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