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    Game Theory Critical Thinking

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    Given the following payoff matrix, ( a) indicate the best strategy for each firm. ( b) Why is the entry-deterrent threat by firm A to lower the price not credible to firm B? ( c) What could firm A do to make its threat credible without building excess capacity? (Refer to Tables Sheet)

    NOTE:
    P10(a):The strategies for firm A are low price and high price and the strategies for firm B are enter and don't enter. What is the best (optimal) strategy for each firm?
    P10(b) is asking whether firm A would use the low price as a threat if firm B enters?
    Firm B
    Enter Don't Enter
    Firm A Low Price (3,-1) (3,1)
    High Price (4,5) (6,3)

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    https://brainmass.com/statistics/probability/game-theory-critical-thinking-625259

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    Chapter 11
    Problem 10
    Given the following payoff matrix, (a) indicate the best strategy for each firm. (b) Why is the entry-deterrent threat by firm A to lower the price not credible to firm B? (c) What could firm A do to make its threat credible without building excess capacity? (Refer to Tables Sheet)

    NOTE: ...

    Solution Summary

    The expert examines game theory critical thinking. The strategies are provided.

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