Pay off matrix of Bob and Tom.

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Answer 1

Question

Chapter 14, Problem 14.2.5PA

Sub part (a):

To determine

Pay off matrix of Bob and Tom.

Sub part (b):

To determine

Dominant strategy.

Sub part (c):

To determine

Dominant strategy.

Sub part (d):

To determine

Dominant strategy.

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Problem 2. If the consumer preference can be represented by a CES function with δ = 0.5, i.e. u(x, y) = x0.5 + y0.5. Let the prices and income be (px, py, w). 1. Set up the Lagrangian expression.2. Take the first-order conditions.3. Substitute into budget constraint to derive the optimal consumption bundles.

1. A town relies on four different sources for its non-drinking water needs: dam water, reclaimed water, rain water, and desalinated water. The different sources carry different risks and costs. For instance, desalinated water is fully reliable due to abundant sea water, but it is more expensive than other options. Reclaimed water also has relatively lower risk than rain or dam water since a certain amount can be obtained, even during the dry. season, by the treatment of daily generated waste water. Using any of the four options requires an investment in that resource. The return on a particular water source is defined as the amount of water generated by the source per dollar of investment in it. The expected returns and standard deviations of those returns for the four water sources are described in the following table: Water resource Expected return St. Deviation Dam water 2.7481 0.2732 Reclaimed water 1.6005 0.0330 Rain water 0.5477 0.2865 Desalinated water 0.3277 0.0000 Higher…

1. Imagine a society that produces military goods and consumer goods, which we'll call "guns" and "butter." a. Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape. b. Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient. c. Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point the Doves might choose. d. Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger "peace dividend," measured by the increase in butter production? Explain.

Answer 2

Question

Chapter 14, Problem 14.2.5PA

Sub part (a):

To determine

Pay off matrix of Bob and Tom.

Sub part (b):

To determine

Dominant strategy.

Sub part (c):

To determine

Dominant strategy.

Sub part (d):

To determine

Dominant strategy.

Expert Solution & Answer

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Answer 3

Question

Chapter 14, Problem 14.2.5PA

Sub part (a):

To determine

Pay off matrix of Bob and Tom.

Sub part (b):

To determine

Dominant strategy.

Sub part (c):

To determine

Dominant strategy.

Sub part (d):

To determine

Dominant strategy.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 14, Problem 14.2.5PA

Sub part (a):

To determine

Pay off matrix of Bob and Tom.

Sub part (b):

To determine

Dominant strategy.

Sub part (c):

To determine

Dominant strategy.

Sub part (d):

To determine

Dominant strategy.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 14, Problem 14.2.5PA

Sub part (a):

To determine

Pay off matrix of Bob and Tom.

Sub part (b):

To determine

Dominant strategy.

Sub part (c):

To determine

Dominant strategy.

Sub part (d):

To determine

Dominant strategy.

Answer 6

Chapter 14, Problem 14.2.5PA

Sub part (a):

To determine

Pay off matrix of Bob and Tom.

Answer 7

Chapter 14, Problem 14.2.5PA

Sub part (a):

To determine

Pay off matrix of Bob and Tom.

Answer 8

Sub part (b):

To determine

Dominant strategy.

Answer 9

Sub part (b):

To determine

Dominant strategy.

Answer 10

Sub part (c):

To determine

Dominant strategy.

Answer 11

Sub part (c):

To determine

Dominant strategy.

Answer 12

Sub part (d):

To determine

Dominant strategy.

Answer 13

Sub part (d):

To determine

Dominant strategy.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 14 - Prob. 14.1.1RQ Ch. 14 - Prob. 14.1.2RQ Ch. 14 - Prob. 14.1.3RQ Ch. 14 - Prob. 14.1.4PA Ch. 14 - Prob. 14.1.5PA Ch. 14 - Prob. 14.1.6PA Ch. 14 - Prob. 14.1.7PA Ch. 14 - Prob. 14.1.8PA Ch. 14 - Prob. 14.1.9PA Ch. 14 - Prob. 14.1.10PA

Pay off matrix of Bob and Tom.

Solution Summary: The author explains the payoff matrix of Bob and Tom. Confessing is the best strategy for Bob, no matter what strategies other players use.

Pay off matrix of Bob and Tom.

Dominant strategy.

Dominant strategy.

Dominant strategy.

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Chapter 14 Solutions