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##### ECON Homework Assignment on Game Theory

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Question;1. In the following game with simultaneous moves, Firm 1 and Firm 2 must decide whether to advertise (Y) or not advertise (N):The NASH equilibrium of this game is (Y, Y) (Y, N) (N, Y) (N, N)1. A strategy in which a player randomizes over several available actions is called A dominant strategy A secure strategy A mixed strategy A trigger strategy1. Consider the following game with sequential moves:In the subgame perfect NASH equilibrium of this game, Firm 1 chooses A and Firm 2 chooses X Firm 1 chooses A and Firm 2 chooses Y Firm 1 chooses B and Firm 2 chooses X Firm 1 chooses B and Firm 2 chooses Y1. There are N = 3 businesses in an oligopoly industry. The businesses produce identical products and have the same marginal cost of MC = 100 dollars. If the market elasticity of demand is EM =?2, the equilibrium price in the industry is 100 dollars 120 dollars 130 dollars 150 dollars1. A monopoly has the total cost function C(q) = 150 + 10q and serves two types of customers, Type A and Type B. If the price elasticity of demand for Type A customers is EA =?3 and the price elasticity of demand for Type B customers is EB =?2, the prices which maximize the profit of the monopoly are PA = 15 and PB = 20 PA = 20 and PB = 15 PA = 20 and PB = 30 PA = 30 and PB = 201. Assume your typical customer has the demand function q = 20? p and your marginal cost is MC = 10 dollars, as illustrated in the graph. Then, the optimal two-part pricing strategy is Fixed fee = 25 dollars and Per-unit price = 15 dollars Fixed fee = 25 dollars and Per-unit price = 10 dollars Fixed fee = 50 dollars and Per-unit price = 15 dollars Fixed fee = 50 dollars and Per-unit price = 10 dollars1. The pricing strategy in which multiple units of a product are sold as a package is called Two-part pricing Peak-load pricing Transfer pricing Block pricing 1. An assembly-line worker is more likely to exert less effort and produce fewer units when he is paid by the hour than when he is paid based on the number of units produced. This is an illustration of Adverse selection Moral hazard Signaling Screening1. A business is considering an investment with uncertain outcomes. In particular, the return from the investment will be 100,000 dollars with 20% probability, 50,000 dollars with 30% probability, and 20,000 dollars with 50% probability. The expected return from the investment is 20,000 dollars 35,000 dollars 45,000 dollars 50,000 dollars1. A business in a perfectly competitive market must decide how much to produce before it knows what the market price will be. The business estimates the price will be p = 25 dollars with 25% probability, p = 20 dollars with 50% probability, and p = 15 dollars with 25% probability. If the total cost function of the business is C(q) = 500 + (1/10)q2, what quantity should be produced to maximize the expected profit of the business?+ 50 units 75 units 100 units 125 units

Paper#56898 | Written in 18-Jul-2015

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