Consider a Bertrand duopoly with differentiated products. Demand for firm i is given by qi(pi,pj)=a - pi - bi.pj, where bi represents firm i's sensitivity to firm j's price. For each firm, this can be high bH with probability r and low bL with probability 1-r, where bH > bL >0. Each firm's measure of sensitivity is private knowledge. All of this is common knowledge. Assume zero costs for each firm. Assume bH=0.7, bL=0.4, r=0.5. The first order conditions for firm i are given by: Select one:
Consider a Bertrand duopoly with differentiated products. Demand for firm i is given by qi(pi,pj)=a - pi - bi.pj, where bi represents firm i's sensitivity to firm j's price. For each firm, this can be high bH with probability r and low bL with probability 1-r, where bH > bL >0. Each firm's measure of sensitivity is private knowledge. All of this is common knowledge. Assume zero costs for each firm.
Assume bH=0.7, bL=0.4, r=0.5. The first order conditions for firm i are given by:
Select one:
a. a – pi – 0.35pi.pj(bH) = 0; a – pi – 0.2pi.pj(bL) = 0
b.
a – 2pi – 0.35[(pj*(bH) + pj*(bL)] = 0; a – 2pi – 0.2[(pj*(bH) + pj*(bL)] = 0
c. a – pi – 0.35pi.pj = 0; a – pi – 0.2pi.pj = 0
d. a – pi – 0.7pi(pj*(bH) + pj*(bL)) = 0; a – pi – 0.4pi(pj*(bH) + pj*(bL)) = 0
Consider a firm and a worker interacting in the market. The firm knows the worker’s marginal product (m) and the worker knows her/his outside option (v). The firm offers a wage wF and the workers simultaneously demands a wage wL. The worker is employed by the firm when wF≥wL and gets a wage w=(wF+wL)/2. If wF<wL, worker does not take the job. The firm’s payoff is m-w when worker is hired, 0 otherwise. The worker’s payoff of w if (s)he is hired, v otherwise. Suppose m and v are identically and independently drawn from a uniform distribution on [0,1]. This game can be modelled as a double auction.
Let the strategy of the firm be wF(m)=a+b.m. where a and b are constants. Then the worker’s best response is:
Select one:
a. wL = c + d.v, for some constants c and d.
b. wL = (a+b+v)/3
c. wL = (a+b)/3 + 2v/3
d. a. wL = (a+b)/3
Consider a scenario where every player privately observes his valuation for an object. In addition assume that the N bidders interact in an auction in which they simultaneously and independently submit their own bids. The highest bidder wins the object but she pays the second highest bid. This is the so called Second Price Auction
A profile of actions where the highest valuation bidder bids his own valuation but all others bid zero is a Bayesian Nash Equilibrium
Select one:
True
False
Its MCQ i just need one correct option for all
URGENT
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