Game Theory, economics discussion help- COURSE FIGHTER |

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Game Theory, economics discussion help- COURSE FIGHTER |

Hello I need assistance with my discussion board and short homework assignments. I’ve attached the discussion board posts as well as the attachment that goes with it. Please follow all the directions to complete this assignment. Answer all questions. As for the homework assignments they are both online and consist of multiple choice as well as questions and answers. These assignments are online so i will provide you with my login information. These assignment are due 4/9 by 7pm no later!! Please complete the discussion board in microsoft word. Remember the discussion board is separate from the homework assignments online. If you have any questions contact me immediately. Below is the discussion board as well as the attachment:

Game Theory

This is a Discussion Board assignment worth 10 points and due Apr 9. It is based upon the content that covers Oligopoly firms and how firms in an oligopoly industry (characterized by a large amount of the total market output being produced by a relatively few firms in the industry) compete in the marketplace. This market behavior is typified by one firm knowing what the other firms are doing in regard to pricing and advertising expenditures, and how firms REACT to other firms decision making, especially in regard to pricing strategies and advertising expenditure strategies. Game theory analyzes the dynamic competitive forces that exist amongst firms in an oligopoly marketplace.

Answer the questions posed in the Discussion Board.

Game Theory Question (10 points)

Below is a game-theory payoff matrix involving two firms and their decisions on high versus low advertising budgets (expenditures) and the effects of each on profits. !! The dollar figures in the payoff matrix represent profit figures based upon high and/or low advertising budgets or expenditures. Remember, one way in which Oligopolistic firms compete is through advertising expenditures. Advertising research has shown when firms spend more money on advertising their sales increase and hence, their profits increase as well.

Consider the following example, where Firm B’s profits are in the lower corner and Firm A’s profits are in the upper corner. Profits from each advertising strategy appear in the cells below of the payoff matrix
In the payoff matrix below, each firm can choose between a low and high advertising budget. If, for example, Firm A chooses a high budget and Firm B a low budget, Firm A’s profit will be $120, and Firm B’s only $60.

What does the payoff matrix suggests in regard to both firms profits and advertising budgets? (5 points)
Why won’t these noncollusive firms (i.e. noncollusive firms are firms that don’t get together and mutually decide on mutual pricing nor advertising strategies) unilaterally cut their individual advertising budgets? (5 points)

Note: with only two firms dominating an industry each firm will be “keenly” aware of pricing and advertising expenditure actions of the rival firm. When one firm increases or decreases prices or makes additional expenditures for advertising – other firms in the industry will typically react to those decisions of the one firm that decreases prices or increases advertising expenditures – sometimes this process is referred to as dynamic competitive analysis. Note that advertising industry data shows that most of the time increasing advertising expenditures results in increasing sales.