Answer :
The dominant strategy for Tacos El Gordo and Tacos Alex is to Advertise, resulting in a Nash equilibrium of 200 for Tacos El Gordo and 20 for Tacos Alex. Colluding in an oligopoly can have benefits like higher prices and increased profits, but also consequences like legal implications and loss of consumer trust.
In the given payoff matrix, the dominant strategy for Tacos El Gordo is to Advertise, as it results in the highest payoff regardless of what Tacos Alex chooses. Similarly, the dominant strategy for Tacos Alex is to Advertise, as it also provides the highest payoff.
The Nash equilibrium occurs when both companies choose to Advertise. In this case, Tacos El Gordo earns a payoff of 200, while Tacos Alex earns a payoff of 20.
Colluding with other firms in an oligopoly can have benefits and consequences. The benefits include the ability to set higher prices, reduce competition, and increase profits. However, there are also consequences such as possible legal implications, loss of trust from consumers, and potential retaliation from other firms.
For more such question equilibrium visit:
https://brainly.com/question/29618306
#SPJ11
