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Really need assistance!! Thank you
This question was answered on Jan 01, 2013. View the Answer
Really need assistance!! Thank you
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Problem1
Dr.FineandDr.Feelgoodaretheonlytwomedicaldoctorsofferingimmediate
walkinmedicalservicesinthetownofSpringfield.Thatis,theyoperateina
duopoly.Eachdoctorcanchargeeitherahighpriceoralowpriceforastandard
medicalvisit.Theaccompanyingmatrixshowstheirpayoffs,inprofitsperpatient
(indollars),foranychoicethatthetwodoctorscanmake.

1. Supposethetwodoctorsplayaoneshotgamethatis,theyinteractonlyonce
andneveragain.WhatwillbetheNash(noncooperative)equilibriuminthisone
shotgame?
2. Nowsupposethetwodoctorsplaythisgametwice.Also,supposeeachdoctor
canplayoneoftwostrategies:itcanplayeitheralwayschargethelowpriceor
titfortatthatis,itstartsoffchargingthehighpriceinthefirstperiod,andthen
inthesecondperioditdoeswhatevertheotherdoctordidinthepreviousperiod.
WritedownthepayoffstoDr.Finefromthefollowingfourpossibilities:
a) Dr.FineplaysalwayschargethelowpricewhenDr.Feelgoodalsoplays
alwayschargethelowprice.
b) Dr.FineplaysalwayschargethelowpricewhenDr.Feelgoodplaystit
fortat.

c) Dr.FineplaystitfortatwhenDr.Feelgoodplaysalwayschargethelow
price.
d) Dr.FineplaystitfortatwhenDr.Feelgoodalsoplaystitfortat.
Problem2
Inthelongrun,thereisnodifferencebetweenmonopolisticcompetitionandperfect
competition.Discusswhetherthisstatementistrue,false,orambiguouswithrespectto
thefollowingcriteria:
a.Thepricechargedtoconsumers
b.Theaveragetotalcostofproduction
c.Theefficiencyofthemarketoutcome
d.Thetypicalfirmsprofitinthelongrun

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HI mvp,Please find your solution attached. I am online for the next few hours in case you have any questions. Thanks! View the full answer

8417321.doc

Problem1
Dr.FineandDr.Feelgoodaretheonlytwomedicaldoctorsofferingimmediate
walkinmedicalservicesinthetownofSpringfield.Thatis,theyoperateina...

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