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lutik1710 [3]
3 years ago
12

Little Kona is a small coffee company that is considering entering a market dominated by Big Brew. Each company's profit depends

on whether Little Kona enters and whether Big Brew sets a high price or a low price:
Big Brew
High Price Low Price
Little Kona Enter $2 million, $3 million
Little Kona Don't Enter ($0,$7)millions ($0,$2)millions

a. Does either player in this game have a dominant strategy?
b. Does your answer to part (a) help you figure out what the other player should do? What is the Nash equilibrium? Is there only one?
c. Big Brew threatens Little Kona by saying, "If you enter, we're going to set a low price, so you had better stay out." Do you think Little Kona should believe the threat? Why or why not?
d. If the two firms could collude and agree on how to split the total profits, what outcome would they pick?
Business
1 answer:
arsen [322]3 years ago
3 0

Answer and explanation:

a) If Kona enters, Big Brew would want to maintain a high price. If Kona does not enter, Big Brew would want to maintain a high price.

Thus, Big Brew has a dominant strategy of maintaining a high price.

If Big Brew maintains a high price, Kona would enter. If Big Brew maintains a low price, Kona would not enter.

Thus, Kona does not have a dominant strategy.

b) Because Big Brew has a dominant strategy of maintaining a high price. Kona should enter. There is only one Nash equilibrium, which is, Big Brew will maintain a high price and Kona will enter.

c) Little Kona should not believe this threat from Big Brew because it is not in Big Brew's interest to carry out the threat. If Little Kona enters. Big Brew can set a high price, in which case it makes $3 million, or Big Brew can set a low price, in which case it makes $1 million.

Thus, the threat is an empty one, which little Kona should ignore; Little Kona should enter the market.

d) If the two firms could successfully collude, they would agree that Big Brew would maintain a high price and Kona would remain out of the market. They could then split a profit of $7 million.

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Answer:

option b is correct

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Explanation:

given data

dividend = $1.75

growth rate = 25% for 2 year

growth rate 1 = 6%

required return 2 = 12%

to find out

current stock price

solution

we will find here first stock price after 2 year that is

stock price = cash flow at 2 year end × ( 1+rate ) / ( rate 2 - rate1 )    ..................1

so here  cash flow at 2 year end = 1.75×1.25 = 2.1875

2.1875 × 1.25 = 2.734

stock price = 2.734  × ( 1+ 0.06 ) / ( 0.12 - 0.06 )  

stock price = 48.30

so stock price at 0.12 return

= cash flow at 1 year / ( 1+ rate 2 ) + cash flow at 2 year / ( 1+ rate 2 )² + stock price / ( 1+ rate 2 )²

= 2.1875 / ( 1+ 0.12 ) +  2.734 / ( 1+ 0.12 )² + 48.30 / ( 1+ 0.12 )²

= $42.64

so option b is correct

current stock price is $42.64

8 0
3 years ago
How does a red team versus blue team exercise help an organization
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Answer:

By practicing simulated cyber attacks. They help in improving the security and firewall of organization thereby enhancing their resistance to cyber infiltration.

Explanation:

Organizations may often intend to evaluate and their degree of vulnerability and test their security standard, hence, they employ the use of a simulated threat pattern whereby the red team act as a threat by using several infiltration techniques usually used by actual infiltrators, the blue team on the other hand acts to repel the advances of the red team by implementing security protocols and architecture capable of neutralizing the simulated attacks of the red team. This way organizations beef up their security in other to forestall actual potential attacks against capable of invading their information and digital systems.

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Answer:

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Explanation:

A computer engineer whose work is less risky due to which his income is also less.  

Unlike a computer engineer, a chemical engineer who works in a nuclear lab performs more risky tasks and earns a higher income.  

Unlike these two, the civil engineer who handles the responsibility of bridge safety performs the riskiest tasks for which he also needs high-quality skills, due to which one can get the most income.

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3 years ago
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The correct answer is B. To plan effective strategies and specific tactics to accomplish the strategic objectives

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The purpose of a situation analysis is to understand deeply a business strengths, potential for growth, areas to improve, among others. Additionally, a business analysis is an important step in a marketing plan that is used for businesses to set and achieve goals according to their situation. In this context, after the situation analysis, the next step is to set goals for the business and then to decide on the strategies and tactics that will be used because without specific strategies it would not be possible to achieve the proposed goals.

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3 0
2 years ago
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Answer:

The correct answer is letter "B": avoidable fixed costs.

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