Q.4 Answer the following questions about pricing and joint production: (a) Use Game theory matrix approach to solve the

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Q 4 Answer The Following Questions About Pricing And Joint Production A Use Game Theory Matrix Approach To Solve The 1 (49.74 KiB) Viewed 30 times

Q.4 Answer the following questions about pricing and joint production: (a) Use Game theory matrix approach to solve the following question: Only two large dry cleaners exist in a big city: A and B. They must choose their pricing strategy. Their payoff matrix is given below: Dry Cleaner B Keep price Keep price 150K Dry Cleaner A Lower price 200K Questions: (i) Do A & B have a dominant strategy? (ii) What will each one of them decide to do in a one shot game? (iii) Is the selection in part (ii) showing Nash equilibrium? Give reason. (b) In a joint production problem with fixed proportions with two products - X and Y: (i) Can a firm be producing and selling one of these products with MR<MC? State yes or no. Provide reason for the rationale in 15-20 words. (11) (111) What is the way out for this firm to handle this situation for optimum profit/avoiding loss? (c) Give one real world example of 2nd degree of price discrimination with a well-labelled graph. Mention the product and the basis of price discrimination clearly in your graph. Show the producer's surplus gain in using this price discrimination instead of following one price. 50K 150K Lower price 50K 50K [6+5+4=15] 200K 50K