2. Two producers of the same good repeatedly compete in prices for T periods. They have the same discount factor 8. In thestage game, each firm chooses between three price levels 2, 4, and 10. The Bertrand stage game profits are given by:(12 - pi)(pi - 2),Pi < p-iui(pi, p-i) =-(12 Pi)(Pi-2), Pi = p-iPip-iIn each of the following parts you must explain your positive or negative answer. If your answer says that some path can beimplemented in an SPNE, then you must list the strategies. (d) Suppose T = ∞0, and 8 € (0, 1). For which 8 can the path ((2, 2), (2, 2), ...) be implemented in a SPNE using any strategies?(e) Suppose T = ∞, and 8 = (0,1). For which 8 can the path ((10, 10), (10, 10), ...) be implemented in a SPNE using grimtrigger strategies?

Answered: Image /qna-images/answer/6677e279-0159-4b47-aad8-7dd5c12a3134.jpg

Answered: 2. Two producers of the same good…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Wile E. Coyote has placed an order for 30 tons of TNT from Acme Enterprises. Acme can manufacture TNT using raw materials (Z) found in a remote underground mine. Acme needs 1/3 ton of Z to produce 1 ton of TNT and they are deciding where to locate their factory in order to minimize transportation costs. The mine and Wile E. Coyote's house are 50 miles apart. By train, the cost of shipping 1 ton of both TNT and Z is $2 per mile. However, Acme faces an additional cost because a river passes between the mine and Wile E. Coyote's house, and the river has no bridge. Wile E. Coyote's House River Mine Both Z and TNT must be loaded onto barges to cross the river, which is located 16 miles from the mine. Barge operators charge $1 per ton of TNT shipped across the river. However, since the raw material Z is highly explosive when mixed with water, barge operators charge Acme $195 to ship one ton of Z across the river. Using the above information, find the transport-cost-minimizing location for…
Ann and Bob are real estate developers, and are considering the following projects: There are two potential projects: A hotel, and a golf course. Expected profits (not incorporating initial construction costs) are as shown in the following table. Note that hotel profits are larger if the golf course is constructed, and vice versa. Hotel profits, no golf course $100M Golf course profits, no hotel $100M Hotel profits, golf course constructed $150M Golf course profits, hotel constructed $200M Time and funding constraints mean that each of Ann and Bob can do at most one of the two projects. Naturally, Ann and Bob also have the option of passing on both projects. The golf course costs $140M to construct. Construction of the hotel is easier if the golf course hasn't yet been built; specifically, the hotel costs $140M to construct if constructed before the golf course, and $160M to construct if constructed after the golf course. Ann is more alert to these potential projects than Bob is and…
We consider the following decision problem, with 4 decisions di,i∈{1,…,4}, and four possible outcomes ωi,i∈{1,…,4}, with the following table of profits: ω1 ω2 ω3 ω4 d1 30 30 0 30 d2 20 20 20 20 d3 0 50 10 40 d4 15 30 10 25 Which decision should be chosen for rewards depending on four different possible outcomes, according to the maximin rule, maximax rule, and optimism-pessimism rule with α<1/3?
A polluter has abatement costs given by MAC = 405-0.15E, and the emissions cause damages given by MD = 0.1E. The government has a law that requires the polluter to pay for damages they cause, but they will only have to pay if the government catches the polluter emitting. If the polluter knows there is only a 68% chance that the government will catch the polluter, and they choose their optimal emission level, how much total damage will they cause? Answer: 30 The correct answer is: $ 172570.7
true or false If profit (∏=TR−TC∏=TR−TC) is equal to zero, the entrepreneur has earned nothing for his talent and risk taking.
Repeated Game Consider the game below, which is infinitely repeated at t = 1,2, .... Both players discount the future at rate d E (0, 1). The stage game is C C 5,5 0,6 D 6,0 1,1 1. The following three questions are about "Grim Trigger" strategies. (a) Describe the "Grim Trigger" strategy profile of this game. (b) Draw the finite automata representation of this strategy profile. (c) Find the lowest value of 8 for this strategy profile to form a subgame perfect equilibrium. 2. Suppose that the players play (C,C) in period t = 1, 3, 5, ... and plays (D,D) in period t = 2,4, 6, ... Compute the discounted payoff of each player. 3. Find a subgame perfect equilibrium such that, on the equilibrium path, (D,D) is played at periods t = 1, 3, 5, ..., and (C,C) is played at periods t = 2, 4, 6, ... Write down the finite automata representation for the strategy profile you proposed. Find the lowest value of d for the profile to form a subgame perfect equilibrium.
1
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The Salar de Uyuni basin in Bolivia contains one of the world's largest deposits of lithium. However, this basin can also be used to grow quinoa, one of the region's most important crops, and is the site of considerable tourism. A study estimated the value of mining lithium from this basin to be worth $380 million, quinoa farming to be worth $11 million, and tourism to be worth $27 million. Assume that if the basin is mined that it cannot be used for farming or tourism. The opportunity cost of mining the basin is _____, and (based on these numbers) Bolivia _____ mine for lithium here. -$11 million; should -$38 million; should -$27 million; should -$418 million; should not

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