2 2. (Problem 9U4 in the textbook) Return to the Tudor-Fordor problem of Section 6.C, when Tudor's low cost is c = 10. Let z be theprobability that Tudor actually has a low unit cost.(UT,UF)→(56+25,25-40)Tudorl X Low priceOutfl-q)C=10: Tudors low cost► (56+56,0)Prob zNatureХFordorCy=15: Tudor's high cost● (19+3,45–40)InialProb 1-zLow price[pTudorH XOut1-q)High price(1-p)• (19+25,0)X Fordor(25+3,45-40)Out[1-g)(25+25,0)(a) How many pure-strategy equilibria are there when z = 0? What type of equilibrium (separating, pooling, or semi-separating)occurs when z = 0 ? Explain.(b) How many pure-strategy equilibria are there wnen z = 1? What type of equilibrium (separating, pooling, or semi-separating)occurs when z = 1? Explain.(c) What is the lowest value of z such that there is a pooling equilibrium?(d) Explain intuitively why the pooling equilibrium cannot occur when the value of z is too low.

Pure strategy: a situation where each player chooses a specific strategy and no player has an…

2. (Problem 9U4 in the textbook) Return to the Tudor-Fordor problem of Section 6.C, when Tudor's low cost is c₁ = 10. Let z be the probability that Tudor actually has a low unit cost. (UT.Up) (56+25,25-40) TudorL X, Low price XPX Out-q] C-10: Tudor's low cost (56+56,0) Prob z Naturexo CH-15: Tudor's high cost Prob-z Fordor (19+3,45-40) Low price[p TudorHX Out(1-a] High price 1-pl (19+25,0) Fordor (25+3,45-40) Out[1-9] (25+25,0)

2. (Problem 9U4 in the textbook) Return to the Tudor-Fordor problem of Section 6.C, when Tudor's low cost is c₁ = 10. Let z be the probability that Tudor actually has a low unit cost. (UT.Up) (56+25,25-40) TudorL X, Low price XPX Out-q] C-10: Tudor's low cost (56+56,0) Prob z Naturexo CH-15: Tudor's high cost Prob-z Fordor (19+3,45-40) Low price[p TudorHX Out(1-a] High price 1-pl (19+25,0) Fordor (25+3,45-40) Out[1-9] (25+25,0)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2. (Problem 9U4 in the textbook) Return to the Tudor-Fordor problem of Section 6.C, when Tudor's low cost is c = 10. Let z be the
probability that Tudor actually has a low unit cost.
(UT,UF)→(56+25,25-40)
Tudorl X Low price
Outfl-q)
C=10: Tudors low cost
► (56+56,0)
Prob z
Nature
Х
Fordor
Cy=15: Tudor's high cost
● (19+3,45–40)
Inial
Prob 1-z
Low price[p
TudorH X
Out1-q)
High price(1-p)
• (19+25,0)
X Fordor
(25+3,45-40)
Out[1-g)
(25+25,0)
(a) How many pure-strategy equilibria are there when z = 0? What type of equilibrium (separating, pooling, or semi-separating)
occurs when z = 0 ? Explain.
(b) How many pure-strategy equilibria are there wnen z = 1? What type of equilibrium (separating, pooling, or semi-separating)
occurs when z = 1? Explain.
(c) What is the lowest value of z such that there is a pooling equilibrium?
(d) Explain intuitively why the pooling equilibrium cannot occur when the value of z is too low.

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There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed in the attached table. If the tenants have the right to be free of loud music enforced through a property rule, how many bands will play in Rock‐n‐Roll Bar on a Saturday night? A. Zero B. One C. Two D. Three E. It depends on transaction costs
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There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed below. Assume the bar owner has the right to hire as many bands as she likes. Iftransaction costs were $90, split between the bar owner and the tenants, how manybands would play? What would social welfare be? A. Three bands would play and social welfare would be ‐100.B. Two bands would play and social welfare would be 75.C. Two bands would play and social welfare would be ‐15.D. No bands would play and social welfare would be 0.E. Three bands would play and social welfare would be ‐190
A $700 laptop has 10% tax. Find the total amount due.
There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed below. If the tenants have the right to be free of loud music enforced through aproperty rule, how many bands will play in Rock‐n‐Roll Bar on a Saturday night? A. ZeroB. OneC. TwoD. ThreeE. It depends on transaction costs