Table 17-3
Suppose that Robert and Howard own the only two movie studios in California. Each producer must choose between a low budget and a high budget strategy for his next film. The economic profit from each strategy is indicated in the table below:
Howard
Low budget | High budget
Robert
Low budget: Howard's profit = $19,000, Robert's profit = $19,000 | Howard's profit = $4,000, Robert's profit = $24,000
High budget: Howard's profit = $25,000, Robert's profit = $5,000 | Howard's profit = $21,000, Robert's profit = $21,000
11. Refer to Table 17-3. Does Howard have a dominant strategy? If so, describe it.
12. Refer to Table 17-3. Does Robert have a dominant strategy? If so, describe it.
13. Briefly describe the practice of predatory pricing.
14. A firm hires some number of custodians to clean a large warehouse. When only a few custodians are hired, they can quickly find and remove a lot of dust and debris. As the number of custodians increases, additional custodians have to go to greater lengths and spend more time to find and remove additional dust and debris. What property of production functions is relevant to the custodians' situation?