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aivan3 [116]
2 years ago
9

Suppose there are only two firms that sell Blu-ray players, Movietonia and Videotech. The following payoff Matrix shows the prof

it in millions of dollars each company will earn depending on whether it sets a high or low price for its players. For example the lower left cell shows that if Movietonia prices low and Videotech prices high, Movietonia earn a profit of $19 million and Videotech will earn a profit of $4 million. Assume this is a simultaneous game and that Movietonia and Videotech are both-profit-maximizing firms.
Videotech
Movietonia high price low price
high price 10, 10 4, 19
low price 19, 4 6, 6

If Movietonia prices high, Videotech makes more profit if it chooses a _____, and if Movietonia prices low, Videotech makes more profit if it chooses a _____.
If Videotech prices high, Movietonia makes more profit if it chooses a _____, and if Videotech prices low, Movietonia makes more profit if it chooses a _____.
Considering all of the information given, pricing high _____ a dominant strategy for both Movietonia and Videotech.

If the firms do not collude, what strategies will they end up choosing?

a. Movietonia will choose a high price and Videotech will choose a low price.
b. Movietonia will choose a low price and Videotech will choose a high price.
c. Both Movietonia and Videotech will choose a high price
d. Both Movietonia and Videotech will choose a low price

The game between Movietonia and Videotech is an example of the prisoner's dilemma.
i. True
ii. False
Business
1 answer:
Karolina [17]2 years ago
6 0

Answer:

From the given Matrix we can see that if videotech is selecting a high price, movietonia has a higher profit when it is charging a low price and this profit is 18. Similarly when videotech is selecting a lower price movietonia again has a higher profit when it is selecting a lower price which is 10. This indicates that movie tonia has a dominant strategy of selecting a low price.

If movietonia is selecting a high price videotech has a a higher pay off of 18 when it is selecting a low price. In case movietonia is selecting a low price videotech again has a higher profit when it is selecting a low price and this profi is 10.

Therefore videotech and movietonia both have dominant strategy of selecting a low price and this implies that low price, low price will be the Nash equilibrium.

In case the two firms are not colluding, both of them will choose a low price.

This is definitely an example of business dilemma game. The statement is true.

Explanation:

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Ellis Television makes and sells portable televisions. Each television regularly sells for $210. The following cost data per tel
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Question

Ellis Television makes and sells portable televisions. Each television regularly sells for $210. The following cost data per television is based on a full capacity of 10,000 televisions produced each period.

Direct material - $80

Direct Labour  -$60    

Manufacturing overhead(70% variable, 30% unavoidable fixed cos)  -$40

A special order has been received by Ellis for a sale of 2,000 televisions to an overseas customer. The only selling costs that would be incurred on this order would be $6 per television for shipping. Ellis is now selling 6,000 televisions through regular channels each period. What should be the minimum selling price per television in negotiating a price for this special order?

Answer:

The minimum selling price = $174.

Explanation:

The minimum selling price to be acceptable for the special order be the same as the relevant variable cost of producing a unit.

The relevant variable cost = marginal cost of a unit

Marginal cost = Direct material  + Direct labour + Variable manufacturing overhead + shipping cost

Marginal cost =  80 + 60 + (70%× 40) + 6

                      = 174

The minimum selling price = $174.

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