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The New York Times reports that Wal-Mart has decided to challenge Netflix and enter the online DVD by mail market. Because of economies of scale, Wal-Mart has a slight cost advantage relative to Netflix. Wal-Mart is considering the use of a limited pricing strategy. They can enter the market by matching Netflix on price. If they do, and Netflix maintains its price, then both firms would earn $5 million. But, if Netflix drops its price in response, then Wal-Mart would have to follow and Wal-Mart would earn $2 million and Netflix $3 million. Or, Wal-Mart could enter the market with a price that is below Netflix's current price, but above Wal-Mart's marginal cost. If it does, Wal-Mart will earn profits of $0 million and Netflix will earn profits of $2 million. Or it could keep its present price. If Netflix keeps its present price, then Wal-Mart will either keep its present price and earn $6 million (while Netflix earns $4 million). Or, Wal-Mart will increase its price and earn $2 million, while Netflix would earn $6 million.
a. Draw the game tree and solve it.b. Draw the game's payout matrix form and identify any Nash equilibrium(s).
Compute the total cost of providing this insured service to the plan before and after the change in coverage.
What accounts for whether case a or case b occurs? d. Suppose that a scalper had secretly learned before the announcement that Aaron Han would not play in the next game. What actions do you think he would take?
This post denotes a practice question for the Sherman Act.
In the context of the IS-LM model, what is the effect of each of the following on equilibrium output and the real interest rate? Explain why these effects occur and show graphically.
Currently, the extent of our economic difficulties has caused the economic policymakers to choose fiscal and monetary policies that are both expansionary.
Monetary theorists maintain that to eliminate the business cycle, it is necessary to eliminate,Through 2005, the most serious U.S. trough since the Great Depression was the one that occurred in,According to monetary theories of the business cycle, fl..
If the prices of A, B, and C are $2, $3, and $1, respectively, and the consumer has $26 to spend on these three products, illustrate what combination of the three products should be purchased in order to maximize utility.
Illustrtae what is the profit-maximizing level of price and quantity for this monopolist.
If the costs of one of the goods rise by 5 percent, Illustrate what will happen to the demand for the other product, holding constant the effects of all other factors?
Suppose the banking system is in reserve equilibrium. The Fed conducts an open market purchase of Treasury securities in the amount of $1 billion.
Compute the cross price elasticity with respect to chicken price, the advertising elasticity and the income elasticity using the information listed
How much is equilibrium level of income or output if Fed decides to set the rate of interest at 10 percent (r=0.10).
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