Exercise Chapters 13 to 17

Exercise Chapters 13 to 17

Chapter 13

Problems 2: Payoff Matrix of player A and B

Dominant Strategy takes place when one strategy has been much better than another strategy. In order words, a strategy is always dominant when it is better than any other strategy. Incorporating this definition to Payoff Matrix of player A, there is no dominant strategy since for having a dominant strategy, Payer A Should generate a higher pay-off than the other player no matter what any other player does.

Considering player B, there is also no dominant strategy since for having a dominant strategy, Payer B Should generates a higher pay-off than the other player no matter what any other player does (Dutta, 2010).

Problems 13: Sequential Game and Advice to Kodak

After analyzing the sequential game given in the question, it is advisable to Kodak to introduce new product and employee moderate and should go for Penetration pricing i.e. low pricing policy. The reason for this is that Kodak would be earning a higher pay-off as compared to Sony. Beside this, Sony has an option to either increase ads or maintain their ads (Adams, 2012).

Problems 15: Russell Crowe and Equilibrium Reasoning

The best pay-off is as followed:

Date with Russell Crowe

Better is date with other guys

Worse is no date tonight

Worst is no date ever with any of these guys

Students shall be ignoring Russell Crowe and the other shall be fixating on Russell Crowe. Therefore, both of them could have a date (McGuigan, Moyer, Harris, 2011).

Chapter 14

Problem 3: American Exports-Import Shipping Company

Equation to be used: TC=20+4(Q1+Q2)

TC=20+4(Q1+Q2)

Profit Maximizing levels of price and output for two Freights

Revenue function: TR = (100 Q1 - 2 Q12) + (80 Q2 - Q22)

Cost function: TC = 20 + 4(Q1 + Q2)

Profit function: p = TR-TC = -20 + 96Q1 + 76Q2 - 2Q12 - Q22

Find where ?p/?Q1 = 96 - 4Q1 = 0 and ?p/?Q2 = 76 - 2Q2 = 0

Q1* = 24 tons; P1* = $52/unit and also Q2* = 38 tons; P2* = $42/unit.

Calculating Marigin revenue at given levels of output for each market

Total Revenue = 100*Q1 - 2*Q12 + 80*Q2 - Q22

Marginal Revenue1 = ?*(Total Revenue)/?*Q1

= 100 - 4Q1

= 100 - 4(24)

= $4/unit

Marginal Revenue2 = ?*(Total Revenue)/?*Q2 = 80 - 2Q2

= 80 - 2(38)

= $ 4 per unit

American's total profits with different prices charged in these 2 months

Total Revenue1: p1 * Q1

: 1000Q1 - 2Q1^2

Total Revenue2: 80Q - Q2^2

Total profit = 100Q1 - 2Q1^2 + 80Q-Q2^2 - [20 + 4 * (Q1+Q2)]

DTR / DQ1 = 0,

DTR / DQ2 = 0

Q1 = 24

Q2 = 38

Total profit = $ 2, 575

or

?*= -20 + 96* (24) + 76* (38) - 2* (24)2 - (38) * 2

= $ 2, 576

Problem 5: Phillips Industries manufactures

Determine Phillips' total profit function

Total profit = P1 * Q1 + P2 * Q2

Total Cost = 10 + 8 * (Q1+Q2)

Profit = Total Revenue - Total Cost

= p1 * Q1 + P2 * Q2 - ...