Burger Doodle,the incumbent firm,wishes to set a limit price of $8 (rather than the profit-maximizing price of $12)to prevent Designer Burger from entering its profitable market.The game tree above shows the payoffs for various decisions.Burger Doodle makes its pricing decision,then Designer Burger decides whether to enter or stay out of the market.If Designer Burger chooses to enter the market,then Burger Doodle may or may not decide to accommodate Designer's entry by changing its initial price to the Nash equilibrium price of $10. If the condition in the question above is NOT met,Burger Doodle will set price equal to $________ at decision node 1 and the outcome _____________(is,is not)a Nash equilibrium.

Question

Burger Doodle,the incumbent firm,wishes to set a limit price of $8 (rather than the profit-maximizing price of $12)to prevent Designer Burger from entering its profitable market.The game tree above shows the payoffs for various decisions.Burger Doodle makes its pricing decision,then Designer Burger decides whether to enter or stay out of the market.If Designer Burger chooses to enter the market,then Burger Doodle may or may not decide to accommodate Designer's entry by changing its initial price to the Nash equilibrium price of $10.  If the condition in the question above is NOT met,Burger Doodle will set price equal to $________ at decision node 1 and the outcome _____________(is,is not)a Nash equilibrium.

Quizplus · Accepted Answer

The Answer of Burger Doodle,the incumbent firm,wishes to set a limit price of $8 (rather than the profit-maximizing price of $12)to prevent Designer Burger from entering its profitable market.The game tree above shows the payoffs for various decisions.Burger Doodle makes its pricing decision,then Designer Burger decides whether to enter or stay out of the market.If Designer Burger chooses to enter the market,then Burger Doodle may or may not decide to accommodate Designer's entry by changing its initial price to the Nash equilibrium price of $10.  If the condition in the question above is NOT met,Burger Doodle will set price equal to $________ at decision node 1 and the outcome _____________(is,is not)a Nash equilibrium.

Burger Doodle,the Incumbent Firm,wishes to Set a Limit Price of $8