32.23 Millie Bush has written a best-seller. Revenues net of production costs are $3007¹/341/3 where T is the number of publicity trips Millie takes and A is the number of ads for the book that appear. Millie has to pay for all of her own publicity trips, which cost $100 each. Her publisher pays for the advertising, which costs $100 per ad. Revenues from the book are split equally between Millie and her publisher. Let T1 be the number of trips that Millie would choose to make in a Nash equilibrium where she chooses the number of trips and the publisher chooses the amount of advertising. Let T2 be the number of trips that Millie should make if trips and advertising are determined so as to maximize total profits net of trip and ad costs. (a) 71 = 1 and 72 = 1. (b) T1 = 1 and 72 = 2. (e) T1= 2 amd T2 = 1. (d) T1=1 and 72 = 1/8. (e) T1= 1/8 and 72 = 1.

32.23 Millie Bush has written a best-seller. Revenues net of production costs are $3007¹/341/3 where T is the number of publicity trips Millie takes and A is the number of ads for the book that appear. Millie has to pay for all of her own publicity trips, which cost $100 each. Her publisher pays for the advertising, which costs $100 per ad. Revenues from the book are split equally between Millie and her publisher. Let T1 be the number of trips that Millie would choose to make in a Nash equilibrium where she chooses the number of trips and the publisher chooses the amount of advertising. Let T2 be the number of trips that Millie should make if trips and advertising are determined so as to maximize total profits net of trip and ad costs. (a) 71 = 1 and 72 = 1. (b) T1 = 1 and 72 = 2. (e) T1= 2 amd T2 = 1. (d) T1=1 and 72 = 1/8. (e) T1= 1/8 and 72 = 1.

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter11: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 12CQ

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