Question
Ford's SellingChevrolet's Selling, Ford Profits (millions) Chevrolet's Profits (millions) Price Price $ 4,000 $ 4,000$ 8$ 8 4,000 8,000126 4,000 12,000142 8,000 4,000612 8,0008,0001010 8,000
Ford's SellingChevrolet's Selling, Ford Profits (millions) Chevrolet's Profits (millions)
Price Price
$ 4,000 $ 4,000$ 8$ 8
4,000 8,000126
4,000 12,000142
8,000 4,000612
8,0008,0001010
8,000 12,000126
12,000 4,000214
12,000 8,000612
12,00012,00077
a. What price will Ford charge?
b. What price will Chevrolet charge once Ford has set its price?
c. What is Ford's profit after Chevrolet's response?
d. If the two firms collaborated to maximize joint profits, what prices would they set?
e. Given your answer to part (d), how could undetected cheating on price cause the cheating firm's profit to rise?
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
