Solutions to Chapter 5 Exercises
Xaviers costs have not changed, nor have the demand functions, so Xaviers best-
response rule is still the same as in Figure 5.1: Px = 15 + 0.25Py. Yvonnes new profit function is By = (Py
2)Qy = (
Solutions to Chapter 4 Exercises
Down is dominant for Row and Left is dominant for Column. Equilibrium: (Down, Left)
with payoffs of (6, 5).
Down and Right are weakly dominant for Row and Column, respectively, leading to a
Solutions to Chapter 3 Exercises
For this question, remember that actions with the same label, if taken at different nodes, are
different components of a strategy. To clarify the answers, the nodes on the trees are labeled 1, 2, etc.
Dr. Luis C. Reyes
Term Paper Guidelines and Grading Criteria
For your term paper, you will write2-3 pages on the contemporary issue that you chose in class with
your group. You will also give a group presentation of no more than 20 minutes about y