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riiahh22
riiahh22
27.06.2019 • 
Business

Aa / suppose that boeing and rolls-royce holdings are the sole producers of a particular jet engine. the two firms currently charge the same price for their products. if neither firm reduces the price of its engine, each firm earns $36 million in profit. if both firms reduce their prices, then each firm will earn $10 million in profit. if one firm reduces its price and the other does not, then the firm that reduces price will earn a profit of $50 million while the other firm will earn a profit of $5 million.1/ if the firms can operate as a cartel, thena/each firm will reduce its pric.b/ each firm will maintain its current price.c/boeing will reduce its price and rolls-royce holdings will maintain its current priced/ rolls-royce holdings will reduce its price and boeing will maintain its current price2/ assuming that collusion is not a possibility, the nash equilibrium occurs whena. each firm reduces its price.b. each firm maintains its current price.c. rolls-royce holdings reduces its price and boeing maintains its current price.d. boeing reduces its price and rolls-royce holdings maintains its current price.bb/ suppose there are two breakfast restaurants in your college town, waffle kingdom and flip’s flapjacks, and they decide to operate collusively as a cartel. if both restaurants abide by the cartel’s agreement, then each will earn $100,000 in profit. if both restaurants cheat on the cartel’s agreement, then each will earn $25,000 in profit. if one restaurant cheats and the other abides by the agreement, then the cheater will earn a profit of $150,000 while the firm that abides will have a loss of $12,500.1 the most profitable combined outcome for the two restaurants would bea/for both restaurants to abide by the cartel’s agreement.b/ for both restaurants to cheat on the cartel’s agreement.c/ for waffle kingdom to cheat on the agreement and flip’s flapjacks to abide by the agreement.d/ there is not a profitable outcome for both restaurants.2/the nash equilibrium for the two restaurants would bea/for both restaurant abide by the cartel’s agreement.b/ for both restaurants cheat on the cartel’s agreement.c/for waffle kingdom to cheat on the agreement and flip’s flapjacks to abide by the agreement.d/there is no nash equilibrium for firms waffle kingdom and flip’s flapjacks.

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