Final exam 21 June 2019

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BUSINESS AND INDUSTRIAL ECONOMICS Final exam June 21st 2019 SURNAME - NAME (Matricola no.)____________________________________________________________ Multiple choice questions 1) Two identical firms are specialized in developing information systems for domotics (i.e. “digital home”). In parallel, they are projecting a rather sophisticated multi-platform software for the complete home automation. This software will allow residential users to manage remotely home appliances (e.g. ovens, washing machines, dish washers). Both firms want to launch their software in the market. But at the present stage the two software are incompatible. Both firms are gauging the opportunity to stipulate a partnership and launch into the market only a single softwar e, where one firm would act as the leader and the other as the follower. In case one firm would act as the foll ower, it should bear a cost of 5 Million Euros in absorbing costs, but no licensing fees paid. Note that if the partnership effectively took plac e, this alliance would be positively seen by home -appliances producers that would not be undecided on which platform endorse in designing appliances able to communicate with the new software. Also consumers would suffer from less uncertainty. For these rea sons, global revenues in case of partnership for the 2 firms would be equal to 10 Million Euros (5 Million to firm 1 + 5 Million to firm 2). If the partnership could not be stipulated, this scenario would depress the market, and in this case, global revenues for the 2 firms would be equal to 4 Million Euros (2 Million to firm 1 + 2 Million to firm 2). On the basis of this information, and supposing that there are no other costs than the absorbing ones aforementioned, please structure the question in a norma l form (lead-…