In a two-player simultaneous game, if player A has a dominant strategy and playe
ID: 1205421 • Letter: I
Question
In a two-player simultaneous game, if player A has a dominant strategy and player B does not, player B will: employ a mixed strategy. choose his best strategy assuming that player A plays her dominant strategy. not achieve a Nash equilibrium. assume that player A does not choose her dominant strategy. The above figure shows the payoff to two airlines. A and B. of serving a particular route. The amounts in the figure represent payoffs before government intervention. What will happen if the government offers a $80) subsidy to airlines that serve this route? Assume the two airlines must decide what action to take simultaneously. Both firms will enter profitably. Firm A will decide not to enter since firm B will. Firm B is still better off not entering. Neither firm will have a dominant strategy. (Multiple choice) In the Carnot model, if a firm's marginal cost increases, its best-response function will: shift inward not change shift outwards t he shift is ambiguous Assuming Cournot behavior, what happens to the market output, the price of the output, and each (inn's output as the number of firms in a market increases?Explanation / Answer
1. a. Employ a mixed strategy
d. Assume that Player A doesn't choose a dominant strategy
As both player play simultanoeusly , so doesn't know the strategy of other.
2. Both firms enter profitably
AS AFTER subsidy the new game is like
A/B enter not enter
enter (40,10) (80,0)
not enteer (0,70) (0,0)
So, both plater has dominent strategy to enter and nash equilibrium is (enter,enter)
3. a Shift Inwards
as Best response function of firm i is qi =[ a – c – bq2]/2b , where marginal cost is c , so since c increases , it will shift inward
4. Cann't see the options but answer would be market output increases , Price of output decreases , and each firm's output decreases
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