Question Details

(solution) There are two gas stations in a certain block, and the owner of the first station knows that if...


There are two gas stations in a certain block, and the owner of the first station knows that if neither station lowers its prices, he can expect a net profit of $100 on any given day. If he lowers his prices while the other station does not, he can expect a net profit of $140; if he does not lower his prices but the other station does, he can expect a net profit of $70; and if both stations participate in this “price war,” he can expect a net profit of $80. The owners of the two gas stations decide independently what prices to charge on any given day, and it is assumed that they cannot change their prices after they discover those charged by the other. (a) Should the owner of the first gas station charge his regular prices or should he lower them if he wants to maximize his minimum net profit? (b) Assuming that the profit figures for the first gas station apply also to the second gas station, how might the owners of the gas stations collude so that each could expect a net profit of $105? Note that this “game” is not zero-sum, so that the possibility of collusion opens entirely new possibilities.      

 


Solution details:

Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
SiteLock

About this Question

STATUS

Answered

QUALITY

Approved

DATE ANSWERED

Sep 13, 2020

EXPERT

Tutor

ANSWER RATING

GET INSTANT HELP/h4>

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

  • As a reference for in-depth understanding of the subject.
  • As a source of ideas / reasoning for your own research (if properly referenced)
  • For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.

NEW ASSIGNMENT HELP?

Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN A DEADLINE.

Order Now