Suppose you and a rival are the only producers of oysters in a town. Each morning...

Suppose you and a rival are the only producers of oysters in a town. Each morning you harvest

oysters to sell in the afternoon. You both have the choice to collect 10 or 20 dozen oysters. Each dozen has a marginal cost of $10 (so the cost of 10 dozen oysters is $100). If 20 dozen oysters in total are brought to the market, they will sell for $35 each. If 30 dozen oysters in total are brought to the market, they will sell for $25 each. If 40 dozen oysters in total are brought to the market they will sell for $20 each. You and your rival must simultaneously decide how many oysters to collect in the morning.
A.Write out the payoff matrix for this game. B.Find the pure strategy Nash equilibrium for this game. C.Suppose, instead, you could discuss with your rival how many oysters to collect in the morning. D. What outcome would you agree to? Is this different from the Nash equilibrium?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

The R-rule for oysters is that you should only eat them in months that contain the...

The R-rule for oysters is that you should only eat them in months that contain the letter R. Assuming that you like to get oysters on Saturday evenings with your friends write a program that uses the year as an input to determine how many times in that year you can get an oyster dinner and make a list of those dates for that year. Do this in a fully automated way and include a consideration of leap-years. In other...

Suppose that MUB is the only producer of electricity in the little town of Microeconomica. The...

Suppose that MUB is the only producer of electricity in the little town of Microeconomica. The faces a demand curve of the form: P = 210 – 4Q, where P (measured in dollars) and Q (measured in kilowatts) stand for the unit price and quantity of electricity produced, respectively. Suppose that in producing electricity for the town, MUB incurs production costs that total C(Q) = 5Q. a. What is MUB’s marginal cost function? b. How many kilowatts of electricity should...

Two pink slime producers, XL and IPSP, are located in an otherwise pastoral mountain town. Each...

Two pink slime producers, XL and IPSP, are located in an otherwise pastoral mountain town. Each producer emits 30 tons of ammonium hydroxide into the atmosphere each year. City planners wish to cut the level of ammonium hydroxide pollution to 50 tons overall. a. Alfred B. Packer steps forward with the following suggestion. “Make each firm cut emissions by 5 tons. That seems fair, doesn’t it?” Do you agree? Explain your answer. b. Suppose that XL and IPSP are both...

Suppose there are only two laptop producers: Dell and Lenovo. Fundamental assumptions of supply and demand...

Suppose there are only two laptop producers: Dell and Lenovo. Fundamental assumptions of supply and demand are that quantity demanded decreases when price increases while quantity supplied increases when price increases. Therefore, the demand curve has a negative slope and the supply curve has a positive slope. Let the Dell and Lenovo laptops be perfect substitutes for each other, meaning that whenever the price of a Dell laptop increases the demand for laptops made by Lenovo increases and vice-versa. Assume...

You are on the second hour of a long weekend morning run. You only ate a...

You are on the second hour of a long weekend morning run. You only ate a small protein bar before your run. Explain what metabolic processes are most active in your body as your cells need to constantly make ATP. In addition, explain what thermoregulatory mechanisms are most likely occurring in your body. (4 pts)

Suppose that there are only three people that live in a (very) small town: Eric, Greg,...

Suppose that there are only three people that live in a (very) small town: Eric, Greg, and Katie. The town is thinking of building a park which you can assume is a public good for these three individuals in the town. Based on the individuals’ demand schedules for the park, which are given below, calculate and graph the social marginal benefit curve for the park. Eric’s Demand Greg’s Demand Katie’s Demand Price per Acre Number of Acres Price per Acre...

Problem 2. Suppose there is only one yoga studio in town. The marginal cost of producing...

Problem 2. Suppose there is only one yoga studio in town. The marginal cost of producing yoga sessions is as follows: MC=12. The yoga studio faces the following market demand function: Q=20-(1/2)P, and marginal revenue MR=40-4Q. (6 points) Calculate the profit-maximizing price, output, and profit for the yoga studio. (bonus: 3 points) Graph the market demand curve, the studio's marginal revenue and marginal cost curves, indicating profit, price, and quantity at the profit-maximizing level of output. (4 points) Suppose that...

4. Chelsea owns the only parking garage in town (i.e., she's a monopolist). Suppose that the...

4. Chelsea owns the only parking garage in town (i.e., she's a monopolist). Suppose that the marginal cost of letting an additional car in the garage is zero, and that the demand for parking in the garage is known. (a) Show how Chelsea determines how many cars she will allow in the garage and how much she will charge each car to maximize her profits. Are profit maximization and revenue maximization equivalent in this case? Why or why not? (b)...

Suppose there are only two driveway paving companies in a small town, Asphalt Inc. and Blacktop...

Suppose there are only two driveway paving companies in a small town, Asphalt Inc. and Blacktop Bros. The inverse demand curve for paving services is P = 1, 600 ? 20Q, where quantity is measured in the number of pave jobs per month and price is measured in dollars per job. The two firms have an identical marginal cost of $400 per driveway. (a) If the two firms collude and act like a monopoly, splitting the work and profits evenly,...

In a one-shot game, if you advertise and your rival advertises, you will each earn $5...

In a one-shot game, if you advertise and your rival advertises, you will each earn $5 million in profits. If neither of you advertises, your rival will make $4 million and you will make $2 million. If you advertise and your rival does not, you will make $10 million and your rival will make $3 million. If your rival advertises and you do not, you will make $1 million and your rival will make $3 million. a. Write the above...

Subjects