Aspen is in house arrest and is not allowed to buy stuff online. She wants a new iPhone and is willing to pay up to $5000 dollars for it. You and I both pay $1000 to buy an iPhone (Assume she only has the option to buy from one of us). Which one of the following statement is true about how much Aspen will pay for the iPhone? Competition between us will lead Aspen to pay 1200 dollars for the iPhone Competition between us will lead Aspen to pay $5000 dollars for the iPhone Aspen will pay exactly $1350 for the iPhone because her demand is inelastic Aspen will pay $5000 dollars for the iPhone, only if we can collude

Aspen is in house arrest and is not allowed to buy stuff online. She wants a new iPhone and is willing to pay up to $5000 dollars for it. You and I both pay $1000 to buy an iPhone (Assume she only has the option to buy from one of us). Which one of the following statement is true about how much Aspen will pay for the iPhone? Competition between us will lead Aspen to pay 1200 dollars for the iPhone Competition between us will lead Aspen to pay $5000 dollars for the iPhone Aspen will pay exactly $1350 for the iPhone because her demand is inelastic Aspen will pay $5000 dollars for the iPhone, only if we can collude

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Consider a town in which only two residents, Gilberto and Juanita, own wells that produce water safe for drinking. Gilberto and Juanita can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Price Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 4.80 4.40 45 $198.00 4.00 90 $360.00 3.60 135 $486.00 3.20 180 $576.00 2.80 225 $630.00 2.40 270 $648.00 2.00 315 $630.00 1.60 360 $576.00 1.20 405 $486.00 0.80 450 $360.00 0.40 495 $198.00 540 Suppose Gilberto and Juanita form a cartel and behave as a monopolist. The profit-maximizing price is $ per gallon, and the total output is gallons. As part of their cartel agreement, Gilberto and Juanita agree to split production equally. Therefore, Gilberto's profit is $ and Juanita's profit is $ Suppose that Gilberto and Juanita have been successfully operating as a cartel. They each charge the monopoly price and…
Bob and Tom are two criminals who have been arrested for burglary. The police put Tom and Bob in separate cells. They offer to let Bob go free if he confesses to the crime and testifies against Tom. Bob also is told that he will serve a 15-year sentence if he remains silent while Tom confesses. If he confesses and Tom also confesses, they will each serve a 10-year sentence. Separately, the police make the same offer to Tom. Assume that if Bob and Tom both remain silent, the police only have enough evidence to convict them of a lesser crime and they will serve 3-year sentences. a. Use this information to complete the matrix below. Tom Don't confess Confess Don't confess Bob serves years Tom serves years Bob serves years Tom serves years Bob- Confess Bob serves years Tom serves years Bob serves years Tom serves years
3. Breakdown of a cartel agreement Consider a town in which only two residents, Gregor and Haidy, own wells that produce water safe for drinking. Gregor and Haidy can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. is Price (Dollars per gallon) 5.40 4.95 4.50 4.05 3.60 3.15 $ 2.70 2.25 1.80 1.35 0.90 0.45 0 Quantity Demanded (Gallons of water) 0 45 90 135 180 225 270 315 360 405 450 495 540 I Total Revenue Suppose Gregor and Haidy form a cartel and behave as a monopolist. The profit-maximizing price is $ per gallon, and the total output gallons. As part of their cartel agreement, Gregor and Haidy agree to split production equally. Therefore, Gregor's profit is and Haidy's profit is $ (Dollars) 0 $222.75 $405.00 $546.75 $648.00 $708.75 $729.00 $708.75 $648.00 $546.75 $405.00 $222.75 0 After Gregor implements his new plan, the price of water Gregor's profit becomes $ Suppose that…
Suppose that there are two competing types of high-definition DVD players, Greenbeam and Mosdef, and each uses a different format. The DVD players are subject to network externalities: the more people who use one type of player, the more production companies adopt that particular format for their movies, and the greater the value of that player to each user. Greenbeam and Mosdef entered the market at around the same time. Which of the following is likely to happen if Greenbeam sells its DVD players at its profit-maximizing price, but Mosdef sells its DVD players at a much lower price than Greenbeam's at the early stages? 1 O Mosdef will dominate the market for high-definition DVD players. O Greenbeam will dominate the market for high-definition DVD players. O Greenbeam and Mosdef will have equal market shares. O Neither Greenbeam nor Mosdef will succeed, and a new company could easily enter and dominate the market. Tr
Q8
Please write your answer as precise as possible. Long answers are not necessary. Consider the oil production of OPEC. We simplify the situation to only two countries' case. Each action in the payoff matrix represents the amount of oil produced by each player. For example, "small" means a small amount of crude oil is produced; “large" means a large amount of crude oil is produced. The payoff pairs in the table represent each country's profit, respectively. For example, "Very high profit, Very low profitť" pair in the bottom left cell denotes a pair of payoffs that Iran gets "Very high profit", and Saudi Arabia gets “Very low profit". Saudi Arabia Small Large Small High profit, High profit Very low profit, Very high profit Iran Large Very high profit, Very low profit Low profit, Low profit *Note: Very high profit > High profit > Low profit >Very low profit What outcome (Nash equilibrium) of this game between two countries would you predict? Use your answer to explain why OPEC has failed…
4.2. Game theory (Prisoner's dilemma). Often, many sectors in an economy have two main rivals, battling it out in the marketplace. There can be rivalry such as between Apple and Samsung in Phones and Laptops. Suppose Apple plans to cut its price. Samsung will likely follow suit to retain its market share. This may end up with low profits for both companies. A price drop by either company may thus be construed as defecting since it breaks an implicit agreement to keep prices high and maximize profits. Thus, if Apple drops its price but Samsung continues to keep prices high, Apple is defecting, while Samsung is cooperating (by sticking to the spirit of the implicit agreement). In this scenario, Apple may win market share and earn incremental profits by selling more. Assume that the incremental profits that accrue to Apple and Samsung are as follows: If both keep prices high (Cooperate), profits for each company increase by AED200 million (because of normal growth in demand). If one drops…
Alice and Julia want to spend time together but have different preferences for their activities. They can choose between two options: going to a soccer game or watching a football game. Alice prefers football and Julia prefers the football game, but they both prefer being together over being apart. If they both choose to attend a soccer game then Julia receives a payoff of 2 and Alice a payoff of 1. If they both choose to attend a football game, then Julia receive a payoff of 1 and Alice a payoff of 2. If one chooses a football game and the other a soccer game then they both receive a payoff of O. The payout matrix below illustrates these payoffs. Which of the following statements are true: I. There is a dominant strategy II. A nash equilibrium exists where Alice attends a football game and Julia attends a soccer game III. A nash equilibrium exists where both friends attend a soccer game IV. Both attending a football game is a stable outcome. Alice Soccer Football Julia Soccer Football…
2. Consider the following "location game." There are two ice cream sellers (Seller 1 and Seller 2) in a small city. Residents are uniformly located on a straight street of length 1. The ice cream sellers need to choose where to set up their carts, and each resident will purchase one unit of ice cream from the nearest seller. The city council has fixed the price of the ice cream, and as a result, each seller just wants sell as much ice cream as possible. (a) We think of this "location game" as a simultaneous-move game, in which each player's payoff is the proportion of residents that buy from her cart. Is this game with discrete strategies or continuous strategies? Please state the set of (pure) strategies for both sellers. Is this game zero-sum or non-zero-sum? (b) Find all NE(s) of this game.
The Gulf Cartel and Sinaloa Cartel are the two major cartels in illegal drug trade in Mexico. Although, each of these cartels are better off sharing the market, they have an incentive to try to take the entire market. In which of the following ways is cheating among these cartel members dealt with in this region?
suppose that the world is comprised of two countries: X and Y. Because of the absence of centralized world governance, the control of global externalities is particularly challenging, which is the case with greenhouse gases linked to climate change. The entries in the following Payoff Table describe each country's well-being under different abatement patterns: X\Y No Abate Abate No Abate 12,12 24,8 Abate 8,24 20,20 Now suppose that the game is repeated indefinitely. Define the concepts of Trigger Strategies and also the concept of Business as Usual Strategies for the repeated game. Verify that trigger strategies supporting cooperative payoffs (20,20) constitute a non-cooperative equilibrium of the repeated game when δ=0.8. Are trigger strategies still an equilibrium when δ=0.30? Explain intuitively why and verify that Business as Usual still is an equilibrium in this case.
Please help with #2