A. What are the state's profit maximizing price and quantity? Graph your answer. B. weighboring New Jersey and . Jew York al ow private retailers to sell wine. Suppos. . Te. : Jersey faces the same statewide demand curve as in beans /. . auia. No intersty'_ wine to_e is permitted. Suppose the New Jersey market is penectly competitive. What is the equilibrium rice and quantity. Graph - our answer. 3. in most .major urban areas in the United States here is no local government that Luc ommasses aid or even most, of the urban area. There are exceptions, such as Indianapolis and Houston, but they are exceptions. Also local governments rely heavily on property taxes. Assume we have a metropolitan area with two local governments. We can think o. them as the central city government and the suburban government. (Of course, in reality, we would likely have many suburban governments but to keep the game simple, we will just have two governments. . We will assume that our local governments can pursue three types of economic development strategies to build their property ta. base. I. do nothing, 4. try to draw successful firms away from the other jurisdiction and 3. engage in efforts to assist their existing firms to grow, develop new businesses and thereby create new jobs. the game is as follows. The suburban government's payoffs are listed first. Local Economic Development Game Suburban Government 10 nothing Draw firms Create new jobs Central from central Lity Lity Govt. Do nothing 600 400 550 500 Draw firms 400 EVO 304 500 from Suburbs Create new 500 550 600 450 - 50 550 jobs a. What is the Nash Equilibrium of this game? How did you know? b. What is the socially optimal (i.e., efficient) outcome of this game? c. Why isn't the socially optimal outcome an equilibrium