1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
nikitadnepr [17]
3 years ago
8

Firms Alpha and Beta serve the same market. They have constant average costs of $2 per unit. The firms can choose either a high

price ($10) or a low price ($5) for their output. When both firms set a high price, total demand is 10,000 units which is split evenly between the two firms. When both set a low price, total demand is 18,000, which is again split evenly. If one firm sets a low price and the second a high price, the low priced firm sells 15,000 units, the high priced firm only 2,000 units. Analyze the pricing decisions of the two firms as a non-cooperative game.
Business
1 answer:
vesna_86 [32]3 years ago
6 0

Answer:

A Nash equilibrium exists when both firms offer a low price.

Explanation:

                                                                       Firm A

                                          profit w/ high price       profit w/ low price    

                                          $40,000 /                      $45,000 /

            profit w/high price               $40,000                        $16,000

Firm

B                                         $16,000 /                       <u>$27,000</u> /

            profit w/low price                $45,000                         <u>$27,000</u>

contribution margin with high price = $10 - $2 = $8

contribution margin with low price = $5 - $2 = $3

Both firms' dominant strategy is to offer a low price since the expected profits = $45,000 + $27,000 = $72,000 is higher than the expected profits with a high price ($40,000 + $16,000 = $56,000). Therefore, a Nash equilibrium exists when both firms offer a low price.

You might be interested in
Safeco’s current assets total to $20 million versus $10 million of current liabilities, while Risco’s current assets are $10 mil
dlinn [17]

Answer:

b. The transactions would lower Safeco's financial strength as measured by its current ratio but raise Risco's current ratio

Explanation:

The formula to compute the current ratio is shown below:

Current ratio = Total Current assets ÷ total current liabilities  

So,

For Safeco, the current ratio would be

= $20 million ÷ $10 million

= 2 times

And for Risco, the current ratio would be

= $10 million ÷ $20 million

= 0.5 times

After borrowing, the current ratio would be

The current assets and the current liabilities would be increased by $10 million in each side.

For Safeco, the current ratio would be

= $30 million ÷ $20 million

= 1.5 times

And for Risco, the current ratio would be

= $20 million ÷ $30 million

= 0.67 times

By comparing the current ratio, we get to know that The Safeco current ratio would be decreased whereas, the Risco current ratio is increased

Hence, option b is correct

4 0
3 years ago
Whats the meaning of oligopoly and monopoly market structure​
leonid [27]
Oligopoly is a market structure with a small number of firms, none of which can keep the others from having significant influence. A monopoly is one firm, a duopoly is two firms and an oligopoly is two or more firms.
6 0
2 years ago
Read 2 more answers
Points for free and maybe brainliest
denis23 [38]
Yasssssssssssssssssss
3 0
3 years ago
Read 2 more answers
Until recently, hamburgers at the city sports arena cost $ 2.50 each. The food concessionaire sold an average of 1750 hamburgers
Artyom0805 [142]

Answer:

  (A) p = -0.002x +6; 0 ≤ x ≤ 3000

  (B) R(x) = x(6 -0.002x); 0 ≤ x ≤ 3000

  (C) C(x) = 1.44x +1903

  (D) (550, 2695), (1730, 4394.20)

  (E) P(x) = -0.002x^2 +4.56x -1903

  (F) increasing at $2.16 per hamburger

Explanation:

(A) The two-point form of the equation for a line can be used.

  y = (y2 -y1)/(x2 -x1)(x -x1) +y1

The two points we have are ...

  (x, p) = {(1750, 2.50), (1450, 3.10)}

so the equation is ...

  p = (3.10 -2.50)/(1450 -1750)/(x -1750) +2.50

  p = 0.6/-300(x -1750) +2.50

  p = -0.002x +6

The domain of this function is where x and p are greater than 0. That will be for ...

  0 ≤ x ≤ 3000

__

(B) Revenue is the product of burgers sold (x) and their price (p).

  R(x) = xp

  R(x) = x(6 -0.002x)

The domain of R(x) is 0 ≤ x ≤ 3000. This is the same as the domain of p(x).

___

(C) The cost function is the sum of fixed costs and variable costs:

  C(x) = 1.44x +1903

__

(D) See the attachment for a graph of cost and revenue. The break-even points are (x, revenue) = (550, 2695), (1730, 4394.20).

__

(E) Profit is the difference between revenue and cost.

  P(x) = R(x) - C(x) = x(6 -0.002x) -(1.44x +1903)

  P(x) = -0.002x^2 +4.56x -1903

__

(F) The marginal profit is the derivative of the profit function:

  P'(x) = -0.004x +4.56

  P'(600) = -0.004(600) +4.56 = -2.40 +4.56 = 2.16

At a production level of 600, the profit is increasing at a rate of $2.16 per hamburger.

6 0
2 years ago
As New Belgium Brewery grew, the owners discovered they needed to hire more and more workers in order to keep up with demand. Th
ivanzaharov [21]

Answer: Organizing.

Explanation:

Organizing is being carried out by the owners of New Belgium Brewery. Organizing is the duty of a manager to arrange available resources in an organization to ensure success is achieved in the organization.

4 0
3 years ago
Other questions:
  • Jim left his previous job as a sales manager and started his own sales consulting business. He previously earned $70,000 per yea
    8·1 answer
  • The __________ enforces) procedures so employees may vote to have an union and for collective bargaining.
    14·1 answer
  • Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these
    15·1 answer
  • Merry Maidens Cleaning generally charges $300 for a detailed cleaning of a normal-size home. However, to generate additional bus
    14·1 answer
  • Your grandfather wants to establish a scholarship in his father’s name at a local university and has stipulated that you will ad
    13·1 answer
  • The financial planning life cycle divides an individual's life into three stages. In stage 2, the focus of individual financial
    13·1 answer
  • Candy crunchers wants to see if their new candy is enjoyed more by high school or middle school students. they decide to visit o
    14·2 answers
  • Wright Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs. The carrying va
    10·1 answer
  • A project has an initial cost of $2,400. The cash inflows are $0, $1,600, $1,100, and $700 over the next four years, respectivel
    8·1 answer
  • ________ is a term for men who are keenly interested in fashion, home design, gourmet cooking, and personal care.
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!