Chapter12questions

# Chapter12questions - Chapter 12 Questions(Additional...

This preview shows pages 1–2. Sign up to view the full content.

Chapter 12 Questions (Additional questions for practice for Exam #2) Spring 2008 Suppose that De Cecco and Barilla are the only two makers of pasta. They each know that if they both limit production to 5,000 packets a day, they will each make the profit of \$75,000 a day. They also know that if either of them produces 15,000 packets a day while the other produces 5,000 a day, the one that produces 15,000 packets will make an economic profit of \$100,000 and the one that sticks with 5,000 packets will incur an economic loss of \$50,000. They also know that if they both increase production to 15,000 packets a day, they both earn zero economic profit. 1. The Nash equilibrium of the game above is a. DeCecco and Barilla both produce 15,000 packets a day. b. DeCecco and Barilla both produce 5,000 packets a day. c. DeCecco produces 15,000 packets a day, and Barilla produces 5,000 packets a day. d. DeCecco produces 5,000 packets a day, and Barilla produces 15,00 packets a day. 2.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This test prep was uploaded on 04/18/2008 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue.

### Page1 / 5

Chapter12questions - Chapter 12 Questions(Additional...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online