Question

QUESTION 9 Alpha Company's Strategy Charge $1,000 Charge $500 Charge $1,000 (60 Billion, 60 Billion) (20 Billion, 100 Billion) Beta Company's Strategy Charge $500 (100 Billion, 20 Billion) (40 Billion, 40 Billion) Assume that the cost of these two firms are identical. The Nash equilibrium is Beta Co. charging $1,000 and Alpha Co.charging $1,000. Beta Co. charging $1,000 and Alpha Co. charging $500. Beta Co. charging $500 and Alpha Co. charging $500. Beta Co. charging $500 and Alpha Co. charging $1,000. QUESTION 10 The game in Question 9 is called The chicken game. Prisoners' dilemma Matching pennies. The battle of sexes. Click Save and Submit to save and submit. Click Save All Answers to save all answers.

Answer 1

9. When Beta company charge $1000 , then Alpha has more profit in charging $500.

And when Beta company charge $500 ,then Alpha has more profit in charging $500.
Similarly, when Alpha company charge $1000, then Beta company has more profit in charging $500.

And when Alpha company charge $500, then Beta company has more profit in charging $500.

This implies that Nash equilibrium: (Charge $500 , Charge $500), that means Beta Co. charging $500 and Alpha Co. charging $500. Hence, option(C) is correct.

10. Because at the Nash equilibrium ,they both end up getting the less optimal outcome , this means that the game is called prisoner's dilemma. Hence, option(B) is correct.