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Unformatted text preview: Economics 11, Winter 2011: Practice Problems #2 Not to be turned in Solutions will be posted 1. Nicholson-Snyder, Problem 8.10 2. Nicholson-Snyder, Problem 15.1ab 3. Nicholson-Snyder, Problem 15.7 4. The first matrix below is Cops & Robbers. Recall that it has a unique Nash equilibrium (in mixed strategies). (a) What would happen to the Nash equilibrium and to the robbery rate if Donuts became worse? Say the payoffs to Cops from eating Donuts decreased from +1 to 0? (b) What would happen to the Nash equilibrium and to the robbery rate if Donuts became better? Say the payoffs to Cops from eating Donuts increased from +1 to +2?. Patrol Donuts Work-5,+2 +5,+1 Rest 0,-1 0,+1 5. Two identical firms A,B produce identical products for sale in a mar- ket. Market inverse demand is P = 12- 2 Q . The firms cost functions are C A ( Q ) = C B ( Q ) = Q/ 4. (a) Find the unique Nash equilibrium in the Cournot model. (Firms choose quantities simultaneously.) (b) Find the unique subgame perfect Nash equilibrium in the Stackel-...
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- Winter '08