FIRST ESSAY QUESTION (50 points)ANSWER ONE OF THE FOLLOWING…
FIRST ESSAY QUESTION (50 points)ANSWER ONE OF THE FOLLOWING TWO QUESTIONS:A. Each of two automobile manufacturers, Apex and Orbit, is considering whether to expand their production of cars along the following lines: If Apex produces Small Cars, it will make a profit of $40 million if Orbit produces Large Cars Or a loss of $20 million if Orbit produces Small Cars. If Apex produces Large Cars, it will make a profit of $40 million if Orbit produces Small Cars Or a loss of $20 million if Orbit produces Large Cars. __________________________________________________________________ If Orbit produces Small Cars, it will make a profit of $40 million if Apex produces Large Cars Or a loss of $20 million if Apex produces Small Cars. If Orbit produces Large Cars, it will make a profit of $40 million if Apex produces Small Cars Or a loss of $20 million if Apex produces Large Cars. Based on the payoff matrix described above, which you can set up using your blank sheet of paper, answer the following questions: Do these firms have a dominant strategy? Is there a Nash Equilibrium? Under what economic circumstances could the outcomes or amounts shown in the payoff matrix for this market likely to occur? OR:B. Fountain Plus Inc., a manufacturer of bottled water products, has had rapid growth in sales of one of its flavored water products, Xtrafresh, for which it has a patent, which expired recently. It now faces fierce competition from many other existing bottled water products manufacturers in the case of Xtrafresh. a. As a manufacturer competing in the market for bottled water products, what type of a market did Fountain Plus Inc. compete in before and after the patent expired? Explain why. b. What two possible outcomes do you see for this company now that its patent on Extrafresh has expired?
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