Wayne State University Managerial Economics Discussion Questions

Category: Business & Finance


Problem Set #5

1. Describe some interaction your company has with another entity (firms producing complementary or substitute products, upstream sup- pliers, or downstream customers), or between internal divisions within your firm that can be described as a sequential or simultaneous game. Diagram the strategies, players, and compute payoffs as best you can. Compute the Nash equilibria. What can you do to change the rules of the game to your advantage? Compute the profit consequences of your advice.

2. Why might Mattel set a much lower margin on its Barbie dolls than on the accessories for the dolls?


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