Company Tau and Company Upsilon are the only sellers of a good with no close substitutes. They are each considering whether to increase their store hours. They project the following daily profit payoff scenarios:

	Company Upsilon
Company Tau		Increase Store Hours	Keep Current Hours
Increase Store Hours	$640, $850	$450, $350
Keep Current Hours	$550, $550	$650, $260

1. Does Company Tau have a dominant strategy to increase store hours, maintain their current hours, or no dominant strategy?
2. Does Company Upsilon have a dominant strategy to increase store hours, maintain their current hours, or no dominant strategy?
3. Assuming no cooperation, what will the profit be for each firm?
4. A local ordinance requires overtime pay amounting to $100 if the companies increase their hours. Draw a new payoff matrix reflecting the cost increase.
5. Assuming no cooperation, what will the profit be for each firm after the cost increase?

Answer rating: 100% (QA)

Company Strategies Dominant Strategy A dominant strategy is an action that is always the best option ... View the full answer