Chapter12questions

Chapter12questions - Chapter 12 Questions (Additional...

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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.
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Chapter12questions - Chapter 12 Questions (Additional...

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