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Bess [88]
2 years ago
12

Two firms decide whether to launch a new product: (i) If both firms choose to launch a new product, then each firm will receive

$40 million due to incurring new expenses; (ii) if just one firm chooses to launch a new product, the firm launching a new product grabs market share from the other firm, and will receive $30 million, while the other firm which chooses not to launch will receive $45 million; (iii) if neither firm choose to launch a new product, then each firm will receive $50 million from current market. Assume both firms wants to maximize its revenue, so what will be their best move
Business
1 answer:
lisabon 2012 [21]2 years ago
4 0

Answer:

don't launch

Explanation:

Game theory looks at the interactions between participants in a competitive game and calculates the best choice for the player.

Dominant strategy is the best option for a player regardless of what the other player is playing.

Nash equilibrium is the best outcome for players where no player has an incentive to change their decisions.

The payoff matrix for this question is

                                     Launch (in millions)               Don't Launch  (in millions)  

Launch (in millions)                  $40, $40                      $30, $45

Don't Launch (in millions)         $45, $30                      $50, $50

It can be seen that the best strategy for each firm is not to launch because the payoffs of not launching ($45, $50) is greater than the payoff  of launching ($40, $30)

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D. They result in new situations that are not covered by old laws

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Explanation:

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5 0
3 years ago
Read 2 more answers
In the market for crude oil, if the change in demand due to the falling price of natural gas (a substitute for oil) is greater t
murzikaleks [220]

Answer:

True

Explanation:

The effects of both changes on price is as follows:

1. The Greater Effect - change in demand due to the falling price of natural gas (a substitute for oil)

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Due to supply disruptions which will result is a reduction in supply, the price of oil will tend to increase as consumers buy more of a commodity in less supply. <em>Thus, the effect on price is a rise</em>.

There, since the greater effect is a price fall, and the lesser effect is a price rise, equilibrium price is expected to fall.

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3 years ago
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Explanation:

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2 years ago
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Answer:

A Common Market

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So, in this market, members eliminate the barriers of trade and adopt or follow the common policy.

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