c. How would the situation of Gaston and Pierre compare with that of Disney and Warner Brothers, depicted in Table 11.1 in the chapter? Like Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively optimal outcome. Like Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively suboptimal outcome. Unlike Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively suboptimal outcome. Unlike Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively optimal outcome. Imperfect Competition - End of Chapter Problem Because cooking soufflés is incredibly difficult, the supply of soufflés in a small French town is controlled by two bakers, Gaston and Pierre. The demand for soufflés is given by P = 30-20. and the marginal and average total cost of producing soufflés is $6. Suppose Gaston and Pierre are each faced with the choice of baking 3 or 4 soufflés each morning. a. In the table, specify the profits each would earn based on the decisions they make, with Gaston's profit on the left and Pierre's on the right. Pierre Bake 4 Soufflés Bake 3 Soufflés Bake 4 Soufflés Gaston Bake 3 Soufflés b. Gaston's profits depend O exclusively on the number of soufflés Pierre bakes. exclusively on the number of soufflés he bakes. on random events over which he has no control. O partly on the number of soufflés he bakes and partly on the number of soufflés Pierre bakes.
c. How would the situation of Gaston and Pierre compare with that of Disney and Warner Brothers, depicted in Table 11.1 in the chapter? Like Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively optimal outcome. Like Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively suboptimal outcome. Unlike Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively suboptimal outcome. Unlike Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively optimal outcome. Imperfect Competition - End of Chapter Problem Because cooking soufflés is incredibly difficult, the supply of soufflés in a small French town is controlled by two bakers, Gaston and Pierre. The demand for soufflés is given by P = 30-20. and the marginal and average total cost of producing soufflés is $6. Suppose Gaston and Pierre are each faced with the choice of baking 3 or 4 soufflés each morning. a. In the table, specify the profits each would earn based on the decisions they make, with Gaston's profit on the left and Pierre's on the right. Pierre Bake 4 Soufflés Bake 3 Soufflés Bake 4 Soufflés Gaston Bake 3 Soufflés b. Gaston's profits depend O exclusively on the number of soufflés Pierre bakes. exclusively on the number of soufflés he bakes. on random events over which he has no control. O partly on the number of soufflés he bakes and partly on the number of soufflés Pierre bakes.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:c. How would the situation of Gaston and Pierre compare with that of Disney and Warner Brothers, depicted in Table 11.1
in the chapter?
Like Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively optimal outcome.
Like Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively suboptimal
outcome.
Unlike Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively suboptimal
outcome.
Unlike Disney and Warner Brothers, Gaston and Pierre are led by individual incentives to a collectively optimal
outcome.
Transcribed Image Text:Imperfect Competition - End of Chapter Problem
Because cooking soufflés is incredibly difficult, the supply of soufflés in a small French town is controlled by two bakers, Gaston
and Pierre. The demand for soufflés is given by P = 30-20. and the marginal and average total cost of producing soufflés is
$6. Suppose Gaston and Pierre are each faced with the choice of baking 3 or 4 soufflés each morning.
a. In the table, specify the profits each would earn based on the decisions they make, with Gaston's profit on the left and Pierre's
on the right.
Pierre
Bake 4 Soufflés
Bake 3 Soufflés
Bake 4 Soufflés
Gaston
Bake 3 Soufflés
b. Gaston's profits depend
O exclusively on the number of soufflés Pierre bakes.
exclusively on the number of soufflés he bakes.
on random events over which he has no control.
O partly on the number of soufflés he bakes and partly on
the number of soufflés Pierre bakes.
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