Practice+Final+1_Solution

Hesaysthiswillgiveyouafirstmoveradvantageshould

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point.]
 
 
 
 
 
 3
 
 
 Firms
and
Markets

 Spring
2010
 Final
Exam
 
 
 
 
 
 
 
 
 
 
 
 c) [4
points]
List
all
the
Nash
equilibria
of
the
game.
 
 [4
points]
NO
PARTIAL
CREDIT
:

60
tons,
60
tons
is
the
Nash
equilibrium
 If
payoff
table
was
incorrect,
but
answers
are
perfect
given
the
payoff
table,
take
 off
only
1
point.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 d) [4
points]
Is
this
equilibrium
outcome
efficient?
Put
differently,
can
the
firms
 achieve
any
outcome
that
is
better?
If
so,
under
what
circumstances
can
these
 firms
achieve
a
better
market
outcome?
What
strategies
could
they
use
to
 achieve
it?
 
 [2
points]
No,
the
equilibrium
is
not
efficient.
(50tons,
50tons)
gives
both
firms
 higher
payoffs.
 
 [2
points]

Can
be
achieved
with
long‐term
interaction
/
repetition,
with
sufficiently
 patient
players.
 Use
for
instance,
grim
trigger
strategies
or
“match
quantity
guarantee”.
 
 
 
 
 
 4
 
 
 Firms
and
Markets

 Spring
2010
 Final
Exam
 
 
 
 
 Over
the
last
few
months,
several
major
changes
occurred
in
the
industry.
The
demand
 curve
shifted.
Accordingly,
the
two
companies
had
to
revise
their
profit
calculations.
 Also,
Quarter
Inc.
had
a
major
mining
accident,
and
as
a
result
is
now
capacity
 constrained.
It
cannot
supply
more
than
70
tons.
So,
now
Quarter
Inc.
must
decide
 whether
to
supply
50
tons,
60
tons
or
70
tons
but
Dime
Inc.
still
decides
between
50
 tons,
60
tons
or
80
tons.


 
 The
profits
to
each
player
in
the
changed
environment
are
given
in
the
table
below.

 
 QQUARTER
 QDIME
 PROFI...
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This document was uploaded on 03/09/2014 for the course BUS 01 at NYU.

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