EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 5, Problem 5.9P
a)
To determine
The pure strategy Nash Equilibrium of the game.
b)
To determine
The outcome would be in case of choosing cooperatively
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Students have asked these similar questions
Two firms, Snow Kings and Ski Express, at Denver International Airport have franchises to
carry passengers to and from the mountains. These two firms compete through advertising. Their
payoff matrix is below. Profits per customer are represented in the following format (Snow
Kings, Ski Express
Snow Kings
Advertise
Don't Advertise
Advertise
25, 15
15, 20
Ski Express
Don't Advertise
30,0
40,5
What combination of strategies achieves the Nash equilibrium in this game?
a) 25,25 (Advertise, Advertise)
b) 15,20 (Advertise, Advertise)
c) 25,0 (Advertise, Don't Advertise)
d) 40,5 (Advertise, Don't Advertise)
Disney and Paramount are both releasing an animated movie at the same time. Each company is fairly
well known, and they are both deciding between pursuing two advertising strategies. Each firm knows that
its profits will be affected by its own decision and the decision of the competing firm. The payoff matrix
below contains the estimated profits for both companies for all possible strategies. Paramount's profits are
in the lower (green) triangle of each cell and Disney's profits are in the upper (blue) triangle of each cell.
Profits (payoffs) are in millions of dollars.
Disney
Strategy 1
Paramount
Strategy 2
Strategy 1
$150
$300
$150
$25
Strategy 2
B
$25
D
$75
$300
$75
1. What is Disney's dominant strategy?
strategy 1
strategy 2
Disney does not have a
dominant strategy.
2. What is the Nash equilibrium in this game?
There is not a
Nash equilbrium.
с
Imagine two Pizzerias are playing a static game where the firms have to choose their strategies simultaneously, selecting a strategy that maximizes its profit given what it believes the other firm will do. Their decision is how many pizzas to produce. They can choose between producing 100, 150 or 200 pizzas each. The profit for respective firm is showed in the payoff matrix below.
a) What is the solution (if there is one) and also describe the characteristic features of this game.
b) If this game was played repeatedly, could that potentially change the outcome of the game? In your answer, you are expected to motivate and describe how.
Chapter 5 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 5.3 - Prob. 1TTACh. 5.3 - Prob. 2TTACh. 5.4 - Prob. 1MQCh. 5.4 - Prob. 2MQCh. 5.4 - Prob. 3MQCh. 5.4 - Prob. 4MQCh. 5.5 - Prob. 1TTACh. 5.5 - Prob. 2TTACh. 5.5 - Prob. 1MQCh. 5.5 - Prob. 2MQ
Ch. 5.6 - Prob. 1TTACh. 5.6 - Prob. 2TTACh. 5.6 - Prob. 1MQCh. 5.6 - Prob. 2MQCh. 5.6 - Prob. 1.1TTACh. 5.6 - Prob. 1.2TTACh. 5.6 - Prob. 1.1MQCh. 5.6 - Prob. 1.2MQCh. 5.9 - Prob. 1MQCh. 5.9 - Prob. 2MQCh. 5.9 - Prob. 1TTACh. 5.9 - Prob. 2TTACh. 5 - Prob. 1RQCh. 5 - Prob. 2RQCh. 5 - Prob. 3RQCh. 5 - Prob. 4RQCh. 5 - Prob. 5RQCh. 5 - Prob. 6RQCh. 5 - Prob. 7RQCh. 5 - Prob. 8RQCh. 5 - Prob. 9RQCh. 5 - Prob. 10RQCh. 5 - Prob. 5.1PCh. 5 - Prob. 5.2PCh. 5 - Prob. 5.3PCh. 5 - Prob. 5.5PCh. 5 - Prob. 5.6PCh. 5 - Prob. 5.7PCh. 5 - Prob. 5.8PCh. 5 - Prob. 5.9PCh. 5 - Prob. 5.10P
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