Adi and Jill are the only doctors in a small Pennsylvania town who offer LASIK eye surgery. The table provides the demand schedule for eye surgeries in this town. Each doctor faces a constant marginal cost of $50 to perform the surgery; there are no fixed costs.

Price (Dollars)	Quantity
500	3
450	4
400	5
350	6
300	7
250	8
200	9
150	10
100	11
50	12

3.1.

If Adi and Jill collude to achieve the monopoly outcome, how many surgeries should each doctor perform? Assume they split the output evenly. Please enter a whole number, with no decimal point.

If Adi believes that Jill will abide by their collusive agreement and perform only three surgeries, find a number of surgeries that Adi could perform that would maximize his profits. (Hint: There is more than one correct answer. You need only select one.)

		A. 5
		B. 4
		C. 2
		D. 8

3.3. Jill does not trust Adi to abide by the agreement and instead believes that he will perform four surgeries. How many surgeries should Jill provide to maximize her own profits?

_______________ Please enter a whole number, with no decimal point.

3.4. The strategy set in which Adi performs _____ surgeries and Jill performs ______ surgeries is a Nash equilibrium.

A. 4, 4 B. 3, 4 C. 4, 3 D. 3, 3

Adi and Jill are the only doctors in a small Pennsylvania town who offer LASIK eye surgery. The table provides the demand schedule for eye surgeries in this town. Each doctor faces a constant marginal cost of $50 to perform the surgery; there are no fixed costs. Price (Dollars) 500 3 450 4 400 5 350 6 300 7 250 8 200 9 150 10 100 11 50 3.1. Quantity 12 If Adi and Jill collude to achieve the monopoly outcome, how many surgeries should each doctor perform? Assume they split the output evenly. Please enter a whole number, with no decimal point. 3.2. If Adi believes that Jill will abide by their collusive agreement and perform only three surgeries, find a number of surgeries that Adi could perform that would maximize his profits. (Hint: There is more than one correct answer. You need only select one.) A. 5 B. 4 C. 2 D. 8 3.3. Jill does not trust Adi to abide by the agreement and instead believes that he will perform four surgeries. How many surgeries should Jill provide to maximize her own profits? _______________ Please enter a whole number, with no decimal point. 3.4. The strategy set in which Adi performs _____ surgeries and Jill performs ______ surgeries is a Nash equilibrium. A. 4, 4 B. 3, 4 C. 4, 3 D. 3, 3 The Coca Cola Company (Coke) and Pepsico (Pepsi) must independently decide how much to spend on advertising this year (low, medium, or high advertising expenditures). Each firm's decision will affect its own profits, as well as profits of its competitor. The following payoff matrix shows the possible outcomes for this game between Coke and Pepsi. Here Coke is the row player and Pepsi the column player. Coke's available strategies are listed on the left (it can choose the rows labeled Low, Medium, or High). Similarly, Pepsi's available strategies are listed at the top (it can choose the columns labeled Low, Medium, or High). Interior cells show the profits (measured in millions of dollars) for each firm, with the profits for the row player (Coke) listed first, followed by profits for the column player (Pepsi). For example, if Coke chooses a low advertising budget while Pepsi opts for a medium budget, then profit will be $7 million for Coke and $10 million for Pepsi. Pepsi's Strategies Low Coke's Strategies 1.1. Medium High Low 9, 11 7, 10 5, 12 Medium 8, 6 8, 7 8, 10 High 10, 4 9, 5 6, 6 If a bit of industrial espionage allows Coke to learn that Pepsi intends to choose a low advertising budget, what is Coke's profit-maximizing decision? A) Medium B) High C) Low 1.2. Which of the following is a dominant strategy for this game? a) Pepsi chooses a medium advertising budget. b) Coke chooses a low advertising budget c) Pepsi chooses a low advertising budget d) Coke chooses a high advertising budget e) Pepsi chooses a high advertising budget f) Coke chooses a medium advertising budget 1.3 At the game's Nash equilibrium, what are the combined profits of Coke and Pepsi, measured in millions of dollars? (For example, if the answer is $14 million, enter \"14.\") _________________________