Assume That Two Gyro Restaurants, Alpha and Beta, Are Competing

question 70

Essay

Assume that two gyro restaurants, Alpha and Beta, are competing for customers and if they both offer a student discount, they would each earn $60,000 in profits.If neither offers a student discount, they each earn $100,000 in profits.If one offers a student discount and the other doesn't, the restaurant that offers the discount earns $80,000 in profit while the other earns $40,000 in profit.
a.Present the information above in the form of a payoff matrix.Let Beta be the row player and Alpha the column player.
b.Does each firm have a dominant strategy and if so what is it?
c.What is the Nash equilibrium?

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Definitions:

Labor Strikes

Work stoppages initiated by employees to protest against their working conditions, pay, or other employment issues.

Norris-LaGuardia Act

U.S. legislation passed in 1932 that restricts the power of courts to issue injunctions against nonviolent labor disputes.

Union Organizers

Individuals responsible for forming, expanding, and maintaining labor unions by rallying workers and facilitating the unionization process.

Right-To-Work Law

Legislation that prohibits union security agreements between companies and workers' unions, allowing individuals in the workforce to work without being compelled to join a union.