Ch 11 Answers to Problems

Principles of Microeconomics + DiscoverEcon code card

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Answers to Problems 1a . All others Sam -5 for Sam -5 for others -6 for Sam 10 for others 10 for Sam -6 for others -1 for Sam -1 for others Study a lot Study a little Study a lot Study a little b. All study a lot and receive an average grade. From the students’ perspective, for everyone to study a little would have been better. 3. The information is worth nothing to Blackadder, who knows that Baldrick’s dominant strategy is to confess, and who in any event has a dominant strategy of his own. 6a. If A breaks its quota while B keeps its, then A will get the largest possible profit and B will get the smallest. Both will get a higher profit if both keep the quota than if both break it. These incentives lead to a payoff matrix like the following: Company B Company A Break Quota Second best for both Best for A Worst for B Best for B Worst for A Keep Quota Third best for both Keep Quota Break Quota Each company’s dominant strategy is to break the quota, which means that both will do so unless some way can be found to enforce the quota. b. Air pollution: if I pollute from my factory and no one else does, then I gain from not
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Ch 11 Answers to Problems - Answers to Problems 1a. All...

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