Managerial Economics Foundation

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Payoffs in the upper right corner go to Pizza Spinners and payoffs in the lower left go theory’s). ) In choosing whether to deliver to six or seven neighborhoods, Pizza Spinners has to take intoxication not only its own costs, but also the delivery area response of its competitor Hairsplitter’s. If the payoffs per week from delivering in six and seven neighborhoods are stipulated in Exhibit 13-1, what will Pizza Spinner’s choose and why? (3 marks) b) In choosing whether to deliver to six or seven neighborhoods, Hardy’s Pizzeria has o taken account not only its own costs but the delivery area response of its competitor Passerines.

If the payoffs per week from delivering in six and seven neighborhoods are stipulated in Exhibit 13-1, what will Hardy’s Pizzeria choose and [TOTAL: 6 MARKS] ANSWER 3 (a) The dominant strategy for Pizza Spinners’ is to deliver to seven neighborhoods which give them the maximum payoff of $750 when Harry Pizzeria chooses to deliver to six neighborhoods with $100 payoff. However when their comparativeness Pizzeria choose to deliver to seven neighborhoods, Pizza Spinners’ payoff will drop to $370 and Harry Pizzeria will get $350 payoff.

Therefore Pizza Spinners’ will choose to deliver to six neighborhoods and their competitor will choose also six neighborhoods so that Pizza Spinners’ will get Nash equilibrium of payoff amounting to $550 and their competitor will get $700 (b) Harry Pizzeria will choose to deliver to six neighborhoods which give them $700 when Pizza Spinners also deliver to six neighborhoods with $550. B) Harry Pizzeria does not have a dormant strategy as when they choose six neighborhoods, Pizza Spinners neighborhoods is Pizza Spinners’ Nash equilibrium. QUESTION 4 a.

Take the setting of a typical McDonald’s restaurant and tell the story of why ungraciousness’s might occur from the first to the fourth employee. Then speculate on whitewashing returns will likely set in. Finally, what conditions could account for uneventful zero or even negative marginal product? Explain in words why McDonald’s [5 marks] b. Your company is considering the acquisition of several other companies. You generalities those companies that are inefficient because you can increase their value quicklime better management. In the resource markets, the per unit price of Barbour is half deeper unit price of capital.

The first company you are considering has a marginal product flour estimated at twice the marginal product of capital. The marginal products of poutiness in the second company are equal. Which company would be the better degenerative? Illustrate with a sketch graph of each firm why you picked the firm you did.

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