Question 5
question 5.1
a) Consider the game below. What are the strategies for Boeing? Does it have a dominant strategy? What are the strategies for Airbus? Does it have a dominant strategy? Does this game have any Nash equilibrium(s)? If the answer is yes, find all equilibriums. If the answer is no, explain why it does not exist.
|
Size of Plane Game |
Boeing |
||
|
Build Jumbo |
Build Small |
||
|
Airbus |
Build Jumbo |
140, 150 |
120, 100 |
|
Build Small |
110, 80 |
50, 50 |
|
b) Consider the game below. What are the strategies for Alice? Does she have a dominant strategy? What are the strategies for Nick? Does he have a dominant strategy? Does this game have any Nash equilibrium(s)? If the answer is yes, find all equilibriums. If the answer is no, explain why it does not exist.
|
|
Nick |
||
|
Go to the movies |
Go to the concert |
||
|
Alice |
Go to the movies |
800, 900 |
100, 100 |
|
Go to the concert |
200, 200 |
240, 300 |
|
question 5.2
Is the following statement true or false?
“If in the perfectly competitive market all firms are identical, the price markup for each firm is zero.” Explain.
question 5.3
a) Using information in the following table, calculate the hourly employment rent and total employment rent.
|
Hourly wage |
$45 |
|
Hourly disutility of effort |
$3 |
|
Hourly reservation wage |
$20 |
|
Weekly hours of work |
15 |
|
Estimated weeks of unemployment |
14 |
b) Do employers benefit from employment rent? Explain.
question 5.4
Provide one example of the principle-agent problem.
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