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Really need assistance!! Thank you
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Really need assistance!! Thank you
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Problem 1
Dr. Fine and Dr. Feelgood are the only two medical doctors offering immediate
walk­in medical services in the town of Springfield. That is, they operate in a
duopoly. Each doctor can charge either a high price or a low price for a standard
medical visit. The accompanying matrix shows their payoffs, in profits per patient
(in dollars), for any choice that the two doctors can make.

1. Suppose the two doctors play a one­shot gamethat is, they interact only once
and never again. What will be the Nash (non­cooperative) equilibrium in this one­
shot game?
2. Now suppose the two doctors play this game twice. Also, suppose each doctor
can play one of two strategies: it can play either always charge the low price or
tit for tat that is, it starts off charging the high price in the first period, and then
in the second period it does whatever the other doctor did in the previous period.
Write down the payoffs to Dr. Fine from the following four possibilities:
a) Dr. Fine plays always charge the low price when Dr. Feelgood also plays
always charge the low price.
b) Dr. Fine plays always charge the low price when Dr. Feelgood plays tit
for tat.

c) Dr. Fine plays tit for tat when Dr. Feelgood plays always charge the low
price.
d) Dr. Fine plays tit for tat when Dr. Feelgood also plays tit for tat.
Problem 2
In the long run, there is no difference between monopolistic competition and perfect
competition. Discuss whether this statement is true, false, or ambiguous with respect to
the following criteria:
a. The price charged to consumers
b. The average total cost of production
c. The efficiency of the market outcome
d. The typical firms profit in the long run

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HI mvp,Please find your solution attached. I am online for... View the full answer

8417321.doc

Problem 1
Dr. Fine and Dr. Feelgood are the only two medical doctors offering immediate
walk­in medical services in the town of Springfield. That is, they operate in a
duopoly. Each doctor can...

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