# Eco 550 Assignment 3

Submitted By jewelshinn
Words 493
Pages 2
Assignment 3
1. Some games of strategy are cooperative. One example is deciding which side of the road to drive on. It doesn’t matter which side it is as long as everyone chooses the same side. Otherwise, everyone may get hurt.
a. Does either player have a dominant strategy? Explain. I don’t believe that either player has a dominant strategy. Dominant strategy is “a strategy that results in the best outcome or highest payoff to a given player no matter what action or choice the other player makes” (Farnham, 2010, p. 233). If both drivers stay on their side of the road, they both pass each other safely. If one driver drives on the wrong side of the road, they both lose. If both drivers drive on the wrong side of the road, they will pass each other safely. So, in all scenarios, a given player will not have any dominant strategy.
b. Is there Nash equilibrium in this game? Explain. I do believe that there is Nash equilibrium in this game. Nash equilibrium is “a set of strategies from which all players are choosing their best strategy, given the actions of the other players” (Farnham, 2010, p. 234). The driver will drive on the correct side of the road because this is their best strategy, assuming that the other driver is using their best strategy.
c. Why is this game called a cooperative game? I believe that this game is a cooperative game because if one or both players don’t cooperate, then neither player wins. Cooperative oligopoly models are “interdependent oligopoly behavior that assume that firms explicitly or implicitly cooperate with each other to achieve outcomes that benefit all the firms” (Farnham, 2010, p. 490).

2. a. What is the firm’s Total Revenue? The firm’s Total Revenue is where (A)(E)= (Total Revenue), This is the rectangle made by CAJG. “Total revenue is represented as a rectangle with Price (on the demand…...

### Similar Documents

#### Eco 550 Week 3 Assignment 1

...ECO550 Week 3 Assignment 1 ECO 550 Part 1: QD = - 5200 – 42P + 20C + 5.2(I) + 0.20(A) + 0.25(M) By converting the cent values into dollars and by putting the values of Price, competitions, income, Advertisement and number of oven, we shall have the following demand. So 500 cents= 5 Dollar 600 Cents= 6 Dollars QD=-5200-42(5)+20(6)+5.2(5500)+0.2(10,000)+0.25(5000) QD = -5200-210+120+28600+2000+1250 QD = 26,560 units Ep ( Price elasticity of demand) Own price elasticity of demand (ep) = ∂Q∂P×PQ ∂Q∂P = -42, P = 5, Q = 26,560 Own Price elasticity (ep) = - 42 × 526,560 x 100= - 0.79 (approx.) EX (Cross Price elasticity-in terms of competitors’ products) Cross price elasticity (exy) = ∂Q∂Px×PQ ∂Q∂Px = 20, Px = 6, Q = 26,560 Cross price elasticity (exy) = 6 × 2026,560 x 100= 0.45 (approx.) EI (Income elasticity) Income elasticity (eI) = ∂Q∂I×IQ ∂Q∂I = 5.2, I = 5500, Q = 26,560 Income elasticity (eI) = 5.2 × 550026,560 = 1.077 (approx.) EA ( Advertisement elasticity) Advertisement elasticity (eA) = ∂Q∂A×AQ ∂Q∂A = 0.2, A = 10,000, Q = 26,560 Advertisement elasticity (eA) = 0.2 × 10,00026,560 = 0.075 (approx.) EM Supply elasticity Supply elasticity (eM) = ∂Q∂A×MQ ∂Q∂A = 0.25, M = 5,000, Q = 26,560 Suppply elasticity (eA) = 0.25 × 5,00026,560 = 0.047 (approx.) Part 2: Price elasticity of demand Price elasticity is -0.79.  There is negative relationship between price and demand. However, the ratio is less than 1, which means that an......

Words: 1472 - Pages: 6

#### Eco 550 Week 3 Assignment 1

...Demand Estimation | [Type the document subtitle] | | Professor: Dr. Camille Castorina | | ECO 550: Managerial Economics and Globalization | 7/21/2014 | | In this assignment we will look at a certain scenario that involves estimating the demand of a product when certain variables are put into place. So first thing is understanding what is demand and how does it apply in Economics. “The law of demand states that when the price of a good rises, the amount demanded falls, and when the price falls, the amount demanded rises. Economists have considered this thoroughly and have developed a measure of the degree of cutback, which they call the “elasticity of demand.” The elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.” “The greater the absolute value of this ratio, the greater is the elasticity of demand. When there is a close substitute for one firm’s brand, for example, a small percentage increase in that firm’s price may lead to a large percentage cut in the amount of the firm’s good demanded. In such a case, economists say that the demand for the good is highly elastic. On the other hand, when there are few good substitutes for a firm’s product, the firm might be able to raise its price substantially with only a small decrease in the quantity demanded resulting. In such a case, demand is said to be highly inelastic” (Henderson,. D 2008). Now let’s look at converting all price values into......

Words: 876 - Pages: 4

#### Eco 550 Entire Course Managerial Economics and Globalization

...ECO 550 Entire Course Managerial Economics and Globalization Follow Below Link to Download Tutorial https://homeworklance.com/downloads/eco-550-entire-course-managerial-economics-globalization/ For More Information Visit Our Website ( https://homeworklance.com/ ) Email us At: Support@homeworklance.com or lancehomework@gmail.com ECO 550 DQ 1: Managerial Economic Decision Making From the e-Activity, assess how business leaders use managerial economics to make business decisions indicating how profits may be impacted. Analyze the principal-agent problem to determine how the relationship could be less adversarial. ECO 550 DQ 2: Fundamental Economic Concepts Pick a recently released good or service. Then, determine the factors that must be evaluated regarding the product’s supply and demand. Analyze how these factors impact the decision to supply the product indicating the significance of each in the decision-making process. ECO 550 DQ 3 From the e-Activity, explain the most important information you would require on which to base sound economic judgments. Explain your rationale. Assess the various forms of organizing and processing information to determine which is the most difficult to get correct. Explain your rationale ECO 550 DQ 4 Analyze the characteristics that make any transaction possible and justify the importance of each of the characteristics.Evaluate the role institutions play in transactions and discuss the likely economic......

Words: 1790 - Pages: 8

#### Eco 550 Complete Class

...ECO 550 Complete Class Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-complete-class/ Or Visit www.hwcampus.com ECO 550 Complete Class ECO 550 Week 3 Assignment 1 – Demand Estimation Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent and Dependent Variables tutorial, located at http://www.sophia.org/tutorials/independentand- dependent-variables–3. Note: Your professor will provide you with the equation and data necessary for you to complete this assignment. You will find this information attached to Assignment 1 within the course shell. Write a four to six (4-6) page paper in which you: 1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. 2. Determine the implications for each of the computed elasticities for the business in terms of shortterm and long-term pricing strategies. Provide a rationale in which you cite your results. 3. Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed.......

Words: 3181 - Pages: 13

#### Eco 550 Complete Class

...ECO 550 Complete Class Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-complete-class/ Or Visit www.hwcampus.com ECO 550 Complete Class ECO 550 Week 3 Assignment 1 – Demand Estimation Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent and Dependent Variables tutorial, located at http://www.sophia.org/tutorials/independentand- dependent-variables–3. Note: Your professor will provide you with the equation and data necessary for you to complete this assignment. You will find this information attached to Assignment 1 within the course shell. Write a four to six (4-6) page paper in which you: 1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. 2. Determine the implications for each of the computed elasticities for the business in terms of shortterm and long-term pricing strategies. Provide a rationale in which you cite your results. 3. Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed.......

Words: 3181 - Pages: 13

#### Eco 550 Complete Class

...ECO 550 Complete Class Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-complete-class/ Or Visit www.hwcampus.com ECO 550 Complete Class ECO 550 Week 3 Assignment 1 – Demand Estimation Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent and Dependent Variables tutorial, located at http://www.sophia.org/tutorials/independentand- dependent-variables–3. Note: Your professor will provide you with the equation and data necessary for you to complete this assignment. You will find this information attached to Assignment 1 within the course shell. Write a four to six (4-6) page paper in which you: 1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. 2. Determine the implications for each of the computed elasticities for the business in terms of shortterm and long-term pricing strategies. Provide a rationale in which you cite your results. 3. Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed.......

Words: 3181 - Pages: 13

#### Eco 550 Complete Class

...ECO 550 Complete Class Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-complete-class/ Or Visit www.hwcampus.com ECO 550 Complete Class ECO 550 Week 3 Assignment 1 – Demand Estimation Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent and Dependent Variables tutorial, located at http://www.sophia.org/tutorials/independentand- dependent-variables–3. Note: Your professor will provide you with the equation and data necessary for you to complete this assignment. You will find this information attached to Assignment 1 within the course shell. Write a four to six (4-6) page paper in which you: 1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. 2. Determine the implications for each of the computed elasticities for the business in terms of shortterm and long-term pricing strategies. Provide a rationale in which you cite your results. 3. Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed.......

Words: 3181 - Pages: 13

#### Eco 550 Complete Class

...ECO 550 Complete Class Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-complete-class/ Or Visit www.hwcampus.com ECO 550 Complete Class ECO 550 Week 3 Assignment 1 – Demand Estimation Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent and Dependent Variables tutorial, located at http://www.sophia.org/tutorials/independentand- dependent-variables–3. Note: Your professor will provide you with the equation and data necessary for you to complete this assignment. You will find this information attached to Assignment 1 within the course shell. Write a four to six (4-6) page paper in which you: 1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. 2. Determine the implications for each of the computed elasticities for the business in terms of shortterm and long-term pricing strategies. Provide a rationale in which you cite your results. 3. Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed.......

Words: 3181 - Pages: 13

Free Essay

#### Assignment #3 Eco550

...ECO 550 Assignment #3 Game Theory and Monopolies by ECO 550 Assignment #3 1. Some games of strategy are cooperative. One example is deciding which side of the road to drive on. It doesn’t matter which side it is as long as everyone chooses the same side. Otherwise, everyone may get hurt. Driver 2 Left Right Driver 1 Left 0,0 -1000 -1000 Right -1000, -1000 0,0 a. Does either player have a dominant strategy? No. A Dominant Strategy is “a strategy that results in the best outcome or highest payoff to a given player no matter what action or choice the other player makes” (Farnham, 2010, p. 233). In a situation such as this, there has to be cooperation, or the consequences could be deadly. b. Is there Nash equilibrium in this game? Yes, if both drivers chose either left or right, there would be equilibrium, since they are “choosing their best strategy, given the actions of the other players,” (p. 234). c. Why this game is called a cooperative game? Given the consequences of life and death, cooperation is needed by both drivers to achieve the optimal outcome. Both drivers must choose either Left or Right, so communication and cooperation are needed. 2. Using the chart, Figure 1. below, answer the following questions. a. What is the firm’s Total Revenue?......

Words: 505 - Pages: 3

#### Assignment 1

...low-calorie microwavable food corporation, I have been asked by my superiors to estimate the following demand equation for our products by using data from 26 competitor supermarkets around the country for the month of April. In order formulate a pricing strategy, we must first find the elasticity for the independent variables listed below. Regression Equation: QD = -1000 - 420P + 20Px +2I (2.002) (17.5) (6.2) (2.5) R2 = 0.55 n= 26 4.88 Values of the independent variables: Q = Quantity demanded for 3-pack units P (in cents)= Price of the product = \$5.00 per 3-pack unit PX (in cents)= Price of leading competitor’s product = \$6.00 per 3-pack unit I (in dollars)= Per capita income = \$5,500 QD = -1000 – 420(5.00) + 20(6.00) + 2(\$5,500) = QD = -1000 – 2100 + 120 +11000 = QD = 8020 KEITH BYCHOLSKI: US? KEITH BYCHOLSKI: the supermarkets would not really be competitors, just locations where you sell your product Running Head: ECO 550 – Assignment 1 3 Bd * P/Q Independent Variables Ep Regression Coefficient (Bd) -420 Independent Variables(P) \$5.00 Demand Quantity (Q) 8020 Elasticity -.261845387 Based on the calculation above for the independent variable of price, the elasticity for demand, the absolute value of the coefficient is .2618 indicating that the price elasticity is inelastic. Since the coefficient is less than 1, consumers are less sensitive to price change (Moffatt). If Eating Skinny were to lower their prices, there......

Words: 666 - Pages: 3

#### Making Decisions Based on Demand and Forecasting

...Assignment 1: Making Decisions Based on Demand and Forecasting Assignment 1: Making Decisions Based on Demand and Forecasting ECO 550 January 24, 2013 Assignment 1: Making Decisions Based on Demand and Forecasting Page 1 I have been considering opening a Domino’s Pizza in my community within the Virginia Beach area. In this paper I will present to you, a data analysis and a forecast of Domino Pizza’s sales revenue that consist of the demographics within my community. These demographics consist of the population size, the average income per household and the independent variables which include the price in pizza and soda. This demand analysis will be used to give an estimated forecast that will assist in my business making decision technique, which will determine if it will be beneficial for me to open a Domino’s Pizza in my area. To determine if I will enter into the market place in Virginia Beach, I will research the reported demographic and independent variables that are relevant to complete a demand analysis that has been provided to me from different resources within my community. By using Excel to calculate, I will input the data that I have collected to create an estimated regression analysis. Once the calculation has been provided, I will be able to interpret the coefficient of determination, and how it has provided an influence on my decision to open the pizza business in my area. Variables. The......

Words: 694 - Pages: 3

#### Mcdonalds V Walmart

...Assignment #3 Rayna Williams Dr. S. L. Terrell Managerial Economics and Globalization – ECO 550 November 20, 2011 1. Some games of strategy are cooperative. One example is deciding which side of the road to drive on. It doesn’t matter which side it is as long as everyone chooses the same side. Otherwise, everyone may get hurt. Driver 2 Left Right Driver 1 Left 0, 0 -1000 -1000 Right -1000, -1000 0, 0 a. Does either player have a dominant strategy? Explain. Driver 2’s strategy: If diver 1 turns left, driver 2 has two choices: Left or right. Driver 2 would turn left as payoff (0) is higher there than negative payoff in Right. Then if diver 1 turns right, driver 2 has two choices: Left or right and he also would turn to right due to higher (0) payoff. As a result, driver 2 does not have a dominant strategy because he moves in a same direction of Driver 1 does and the dominant strategy is regardless of what any other players do, the strategy earns a player a larger payoff than any other. Driver 1’s strategy: If diver 2 turns left, driver 1 has two choices: Left or right and driver 1 would turn to left due to higher payoff (0). Then if diver 2 turns right, driver 1 has two choices where he would turn to right as the payoff is higher (0) than......

Words: 571 - Pages: 3

#### Operations Decision

...Assignment 1: Operations Decision Kimberly D Coello Prof. James Ibe, Ph.D., CAE. ECO 550 Managerial Economics and Globalization 20 July 2012 Assignment Assume you have been hired as a managing consultant by a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days / month). The daily wage (per worker) is \$70, and the price of the firm's output is \$32. The cost of other variable inputs is \$2,000 per day. You are told that the firm's fixed cost is “high enough” so that the firm's total costs exceed its total revenue. The marginal cost of the last unit is \$30. 1. Briefly describe the details of the fictitious business that you created for this assignment. Light Up the Sky, Inc. is a company that manufactures luminescent kites. This company has been in business for the past 10 years and during this time has established itself as a high quality manufacturer of these kites. Even though this company appeals to a small fraction of the entire kite industry, they had been able to maintain a 20% profit margin. Due to the lagging economy, their profit margin dropped below the breakeven point and they are now considering shutting down production. 2. Assess the current environmental scan factors. Determine the factors that will have the greatest impact on plant operations and management’s decision...

Words: 938 - Pages: 4

#### Econ 550

...Running Head: “Long-Term Investment Decisions – Assignment 4” Long-Term Investment Decisions – Assignment 4 ECO 550 December 15, 2013 Long Term Investment Decision This assignment is a continuation of assignment 3. Facebook and social media were addressed in the previous Economics 550 course assignment. This assignment discusses long term investment decisions. Long Term Investment decisions are important for the longevity of every company. Long term investment decisions require managerial planning, strategies, knowledge and adequate resources. Government Regulation Government regulation is needed in the market economy. A lack of government regulations in the market economy would allow utter chaos in most markets. A lack of government regulations would allow for unfair business practices. Supply and demand would become totally undisciplined. Facebook and other social media companies generate revenue from advertisements. Advertising companies are their customers. Facebook delivers the advertising via the social network comprised of consumers. Advertisements are place on the consumer’s homepage and newsfeed in hopes that this will result in purchases from the advertised company. Government regulation in social media is relatively new. One of the biggest challenges is disclosure of consumer information. A bill introduced by state Senator Ellen Corbett (D-San Leandro) would regulate privacy on social......

Words: 1424 - Pages: 6