Hopefully I won't get in trouble for doing this, but here is a question off my final, from one of the topics that I enjoyed most in this class, game theory:
Suppose you are given the following information on a two-firm oligopoly (duopoly).
Firm A will earn $6,000 in profit if it charges a price of $10 and Firm B charges a price of $10, Firm B will earn $6,000 in profit.
Firm A will earn $1,000 in profit if it charges a price of $10 and Firm B charges a price of $7, Firm B will earn $8,000 in profit.
Firm A will earn $8,000 in profit if it charges a price of $7 and Firm B charges a price of $10, Firm B will earn $1,000 in profit.
Firm A will earn $2,000 in profit if it charges a price of $7 and Firm B charges a price of $7, Firm B will earn $2,000 in profit.
A. (10 points) Construct a game tree showing the decisions facing firms A and B with firm A in the lead position.
B. (5 points) Given the game tree above, what is Firm A’s dominant strategy?
C. (5 points) Given the game tree above, what is Firm B’s dominant strategy?
D. (5 points) What is the Nash equilibrium?
There was even a little calculus that I had to do for this class. That was challenging for me at first, since I hadn't done any math since I was a junior in high school. And I've never taken calculus.
Anyways, there it is! I'll let you know when it becomes official, and I get my diploma and everything.
5 comments:
Bryce that's so impressive. I'm so proud of you!
NASH-- the man! Who said crazy was bad again?
Holy cow, I love game theory... its been my favorite part of economics as of late.
And MAD PROPS on finishing your MBA. Truly, it is a feat and congratulations are deserved!
Yeah, I really liked that Nash's game theory.
My son! All growed up and saving Orem. (snif) I'm so glad you got finished before the shut down the program completely.
oops, I was logged in as Aussie. Actually this is Mom. bet you will be glad not to have homework at night!
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