Question

Two computer​ firms, A and​ B, are planning to market network systems for office information management. Each firm can develop either a​ fast, high-quality system​ (High), or a​ slower, low-quality system​ (Low). Market research indicates that the resulting profit to each firm for the alternative strategies are given by the payoff matrix to the right.If both firms make their decisions at the same time what are the pure strategy Nash​ equilibria?​A.(High, Low) and​ (Low, High)B.(High, High) and​ (Low, High)C.(High, High) and​ (Low, Low)D.(Low, Low)E.none of the above.Suppose that both firms try to maximize​ profit, but that Firm B has a head start in planning and can commit first. Now what will be the​ outcome?A.Firm B to first choose high and then Firm A to choose low.B.Firm B to first choose high and then Firm A to choose high.C.Firm B to first choose low and then Firm A to choose low.D.Firm B to first choose low and then Firm A to choose high.E.none of the above.What will be the outcome if Firm A has the head start in planning and can commit​ first?A.Firm A to first choose high and then Firm B to choose high.B.Firm A to first choose high and then Firm B to choose low.C.Firm A to first choose low and then Firm B to choose lowD.Firm A to first choose low and then Firm B to choose low.E.none of the above.Getting a head start costs money. ​ (You have to gear up a large engineering​ team.) Now consider the​ two-stage game in​ which, first, each firm decides how much money to spend to speed up its​planning, and,​ second, it announces which product​ (High or​ Low) it will produce. The firm that spends​ more, chooses first. Which firm will spend more to speed up its​ planning? How much will it​spend? Should the other firm spend anything to speed up its​planning?The firm that should spend the most to speed up its planning is Firm? ( ) ​(enter either​ "A" or ​"B"​), which would be willing to spend up to ​$? ( ) ​(Enter a numeric response using an​integer.)The amount the other firm would then spend to move first is?A.$5 because it is an advantage to move second.B.​$10 because it is an advantage to move first.C.$0 because it is unwilling to outbid the winner for the option of moving first.D.$5 because it is unwilling to outbid the winner for the option of moving first.E.$5 because it is an advantage to move first.

Answer 1

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