Consider the following sequential move game:
a. What are the subgame perfect equilibrium strategies in this game?
b. List all possible strategies for the two players.
c. Illustrate this game in a payoff matrix.
d. Indicate the Nash equilibria in the payoff matrix from (c).
e. What makes some of the Nash equilibria not subgame perfect?
What will be an ideal response?
Player 2: (U,D)
b. Player 1: (L,L), (L,R), (R,L), (R,R)
Player 2: (U,U), (U,D), (D,U), (D,D)
c.
d.
e. In both of the Nash equilibria that are not subgame perfect, player 1's equilibrium strategy includes the non-credible threat that L will be played in stage 3. And in the Nash equilibrium where player 2 plays (D,U), player 2 also plans to play non-credibly from the second node -- although this "non-credible threat" doesn't actually achieve anything for player 2.
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If both prices increases by 50%,
A) budget constraint will be unchanged. B) slope of the budget constraint stay the same. C) slope of the budget constraint will decrease. D) budget constraint will shift outward in a parallel fashion.
Over a ten year period, the monthly charge for cellular phone service decreased from $120 per month to $30 per month. At the same time, the number of subscribers increased from less than 10 million to more than 75 million. Which of the following provides the best explanation for these changes?
a. An increase in consumer income over this ten year period b. A reduction in the price of residential phone service, a substitute for cellular phone service c. An increase in the wages of workers in the cellular phone industry d. Technological improvements that reduced the cost of supplying cellular phone service
The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a(n) ____ economic statement, and the labor head's statement is a(n) ____ economic statement
a. normative; normative b. normative; positive c. positive; normative d. positive; positive e. proper; improper
The lower the concentration ratio, the
a. more control an individual firm has to set prices. b. more competitive the industry. c. less competitive the industry. d. Both a and c are correct.