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Why is determining the condition for tax evasion at pure strategy Nash equilibrium and mixed strategy Nash equilibrium important for determining the tax fraud crackdown strategy of a tax agency?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Why is determining the condition for tax evasion at pure strategy Nash equilibrium and mixed strategy Nash equilibrium important for determining the tax fraud crackdown strategy of a tax agency?

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Hello, In a) I get qi=2, price=3 and profiti= 4. I had a question on (b), I attached my answer in handwritten, is it correct to do it by showing Lemma 1 result? It is so confusing. So, based on this with q(bar) as capacity constrained, and they are not gigantic capacity, I assumed it is played under pure strategy equilibrium of pricing game. Hence, the "optimal price = market-clearing" price is a Nash Equilibria as in Lemma 1. Pls, can you help me with (b)? Thanks
Typed plz and Asap thanks
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Handwritten asap plzzzzzz...solve 20 mins..i"ll give you more votes