Suppose that two players are playing the following game. Player 1 can choose either Top or Bottom, and Player 2 can choose either Left or Right. The payoffs are given in the following table:
player 2:
left right
player 1 : Top: (1,2) (2,4)
bottom: (3,4) (0,3)
where the number on the left is the payoff to Player 1, and the
number on the right is the payoff to Player 2.
A) (2 points) Does Player 1 have a dominant strategy, and if so
what is it?
B) (2 points) Does Player 2 have a dominant strategy and if so what
is it?
C) (1 point each) For each of the following strategy combinations,
write TRUE if it is a Nash Equilibrium, and FALSE if it is not:
D) (2 points) What is Player 1’s maximin strategy?
E) (2 points) What is Player 2’s maximin strategy?
F) (2 points) If the game were played with Player 1 moving first
and Player 2 moving second, using the backward induction method we
went over in class, what strategy will each player choose?
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Q.9.1 Explain the various steps involved in the Box‐Jenkins methodology for forecasting.
Q.9.2 Which step do you think is the most significant? Why?
Q.9.3 What are the differences and or similarities between Box–Jenkins and VAR approaches to
economic forecasting?
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What do you think is the most equitable and fair way to deal with the issue of subsidies and the global market for cotton?
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What are the impacts of different forms of elasticity of demand on the consumer and producer surplus?
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What is tax incidence? How does it relate to price elasticity of supply/demand? How might understanding tax incidence be important when evaluating public policy proposals?
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Apply the "three-legged stool" method of moral reasoning to the problem of the UNC Athletics scandal. What went wrong? Does the method of moral reasoning work? What are the key considerations here? Why could each of the three systems have a problem coming to the right answer if viewed individually? Does this problem go away if viewed collectively? (hint: think about the definitions under what circumstances will the "three-legged stool" method fail?)
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Q5. In a panel data modelling scenario, what are fixed effects? Discuss (show in equation form) three ways that you could use to estimate a Fixed effects
model and discuss the suitability of each method
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4.) What is tax incidence? How does it relate to price elasticity of supply/demand? How might understanding tax incidence be important when evaluating public policy proposals?
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Discuss two formal tests for cointegration and why they are considered superior to the Engle
and Granger method.
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Should We Reduce Population? Consumption? Can We Have it All?
Think about everything you saw in this module.
Are we doomed as a society or is there hope? What do you think? Should we reduce population? Should we reduce consumption? Can we have it all? Is there a racist agenda behind population control and the desire to have the rest of the world consume less?
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Please write your name and student ID number clearly at the top of your answer paper.
1. Production Possibilities Frontier gives us the information about the combinations of goods and services that can be produced by a country given its resources and production technology.
a. Assume that China can only produce 2 goods: toys and computers. Draw China’s PPF and clearly
specify the axes.
b. In class we learned about China’s demographic challenge. Describe this challenge in a few sentences.
c. To address the demographic challenge, say China opens up a favorable immigration policy to
encourage the migration of skilled labour into the country. In the same graph that you drew for part a, draw the change that will occur on the PPF. Explain why the PPF changed this way.
2. UAE has experienced phenomenal growth in the past couple of decades. List and explain 3 factors that helped propel this growth.
3. Fill in the following blanks. You only need to write the answer in the answer paper. Number the answers clearly.
a. The value of everything we give up to obtain something is called __________________
b. The economic system of collective ownership and joint share in the prosperity is known as ____________________
c. The country is said to have the __________________________________ in the production of a good if it has the lowest opportunity cost.
d. The gain in well-being of consumers from consumption of a good or service is known as ____________________________
e. The biggest advantage of free markets is that an efficient allocation of resources is achieved at _________________________________
f. If the price of a product increases, then the producer surplus in the market is expected to _______________________________ (increase/decrease)
g. Pegging the CNY against USD for almost 2 decades helped Chinese growth by keeping the prices of Chinese-made products ___________________ (low/high) in the foreign markets.
h. In the 1930s major part of UAE’s GDP comprised of Pearl fishing. This belongs to the ________________________ sector in the model of industrialization.
i. When the government imposes a tax in a market, the total surplus is calculated as the sum of ____________, _________________, and ________________
4. We
and cause a loss in welfare.
a. In the market for a life-saving drug such as insulin, what kind of price control would the government
know that any government intervention is likely to move the market away from the equilibrium point
want to impose? Why?
b. Say the government imposes a price floor above the equilibrium price. Using a graph explain what
happens to the market price, quantity bought and sold, consumer surplus, and producer surplus after the price floor is imposed. Show all of these things and the deadweight loss on the graph.
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Q3: Choose one of the products from List A (avocados, camel milk, champagne, gold, Japanese melons, oysters, truffles, vanilla) OR from List B (air travel, palm oil)
If you chose a product from List A,
summarize the impact of each event using the table below
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