# answers5 - Econ 1 M10 Quiz 5 Name Perm 1 There are two...

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Econ 1 M10 Quiz 5 Name_________________________ Perm____________________ 1. There are two identical firms that sell purple sugar water. The firms can either collude and both set the monopoly price of \$18, or either firm can cheat by setting a price of \$10. The firm’s payoffs can be summarized in the game matrix below, where the first entry in each cell is Firm A’s profits, and the second entry is firm B’s profits. Underline the profit corresponding to the best response for each firm, and circle the Nash equilibrium. Firm B P=\$18 P=\$10 P=\$18 Firm A \$72, \$72 \$0, \$80 P=\$10 \$80, \$0 \$40, \$40 2. The table below shows Tubby’s production of ice cream. Use this information to fill out the Marginal Product (MP), Revenue, and Value Marginal Product (VMP) columns, if Tubby’s can sell its ice cream for \$3 per tub. N (number of workers) Q (tubs of ice cream) MP Revenue VMP 0 0 ----------------- \$0 ------------------- 1 200 200 \$600 \$600 2 700 500 \$2100 \$1500 3 900 200 \$2700 \$600 4 1000 100

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answers5 - Econ 1 M10 Quiz 5 Name Perm 1 There are two...

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