6. Consider two ice cream sellers competing at a beach that is 1000 metres long. Ice cream prices are fixed by the ice cream company, but companies can choose their locations simultaneously. Customers are located uniformly (spread out evenly on the beach) and do not like walking. The cost of walking every metre is the same (i.e. linear cost). Where will the ice cream stands be located in the Nash equilibrium if the locations are chosen simultaneously? а. b. What are the socially optimal locations, i.e. the best from society's point of view that minimise transportation cost? Are the locations in the Nash equilibrium different from the socially optimal locations? Explain. Suppose there are three ice cream sellers that locate simultaneously. Find the Nash equilibrium is there is one. Else, explain why there is none. (Focus on pure strategy Nash equilibria) С.

6. Consider two ice cream sellers competing at a beach that is 1000 metres long. Ice cream prices are fixed by the ice cream company, but companies can choose their locations simultaneously. Customers are located uniformly (spread out evenly on the beach) and do not like walking. The cost of walking every metre is the same (i.e. linear cost). Where will the ice cream stands be located in the Nash equilibrium if the locations are chosen simultaneously? а. b. What are the socially optimal locations, i.e. the best from society's point of view that minimise transportation cost? Are the locations in the Nash equilibrium different from the socially optimal locations? Explain. Suppose there are three ice cream sellers that locate simultaneously. Find the Nash equilibrium is there is one. Else, explain why there is none. (Focus on pure strategy Nash equilibria) С.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the 3 x 3 matrix below, what is the Nash equilibrium? Р2 N S E U 6,4 7,3 5, 5 P1 H7,3 3,7 4,6 L 8,2 | 6,4 | 3, 7 Select one: a. U,E b. 8,2 О с. 5,5 O d. L,N
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Q:3 a,b and c
Two rival companies competing in the same market need to decide their plans for future expansion of their stores. The Table below shows the possible outcomes of their mutually interdependent actions (payoffs are profits in £m) Giga Company Titanic Conglomerate No Change Refurbishment of existing stores Large Expansion No Change 30, 40 25, 35 15, 24 Refurbishment of existing stores 35, 30 28, 32 18, 33 Large Expansion 12, 22 18, 20 20, 25 The Nash equilibrium: (A) does not exist. (B) occurs when both firms choose Refurbishment of existing stores. (C) occurs when both firms choose Large Expansion. (D) occurs when both firms choose No Change.
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rituo? A. Identify the pure-strategy Nash equilibrium/a in the game below, and identify the Pareto efficient strategy combinations. (You may simply state these, you do not need to show how you derived your answer.) B. Identify the mixed-strategy equilibrium to the game. Show your work. You may use the equations from the "generic" 2X2 game if you wish. Doing it the long way is fine, however. C. State the payoff for each player in the mixed-strategy equilibrium. Is the mixed-strategy combination Pareto efficient? Player 1 U D 20 Player 2 L (10,15) (1,5) R (0,6) (1,6)
Consider the following simultaneous games. List all pure equilibrium.