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Question 1 – 50 marks

One of your friends is setting up a coffee shop in Liverpool. The market structure is monopolistic competition, and your friend is looking for your advice. Which kind of strategies your friend should put in place to be able to enter the market and achieve some degree of market power?

Total marks: 50 marks

Question 2 – 50 marks

Intenso is a small coffee company that is considering entering a market dominated by Lavazza. Each company’s profit depends on whether Intenso enters and whether Lavazza sets a high price or a low price. By considering the payoff reported below, discuss what game theory is and how game theory relates to market structures.

Lavazza Lavazza

High price Low price Intenso Enter 2,3 1,1 Intenso Don’t enter 0 , 7 0 , 2

If Lavazza threatens Intenso by saying “if you enter, we’re going to set a low price, so you had better stay out’, do you think Intenso should believe the threat? Why or why not? Discuss the concept of credible strategies and explain what you think Intenso should do and why.

Total marks: 50 marks .

Pls do both questions

Type Of Service: Academic paper writing
Type Of assignment: Team paper
Subject: Economics
Pages/words: 8/2000
Number of sources: N/A
Academic Level: Undergraduate
Paper Format: MLA
Line Spacing: Double
Language style: UK English

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