Answer all...its my assignment

Exercises Question 1 (Perfectly Competitive Market] Which of the following is most likely considered a typical firm in a perfectly oompetitive industry? a} Apple Corporation h} A wheat farmer in Wisconsin c] University of Wisconsin d} Ian's Pizza Suppose the xed cost is $60. In this perfectly competitive industry, it the market price of this product is currently $20, each prot-maximizing rm will produce units and earn an h]. 23-15100 c} 0f-$60 d}15f$1so Emestion 3 (Prot Mardmizalim't] Consider the following information table regarding costs of production. 1. If the market price is $40, this rm should produce units to maximize its prots, which Is 2. If the market price is $20 this rm should produce units to maximize its prots, which Is 3. If the market price is $16 this rm should produce units to maximize its prots, which Is 4. If the market price is $3 this rm should produce units to maximize its profits, which is 1 Business Learning Center - Econ 101 (Hansen) - Session 9 (October 2],. 2015} Tutor: Kanit Kuevihulvanich Question 4 (Prot Maidmizatim't - Equation Format] Consider the Following production cost information of a rm. Total cost: Tf=q2+2q+4 Marginal cost: MC = 2g + 2 Average cost: AC = q + 2 + 40ft; 1. What is the amount of fixed cost experienced by this rm? a} 2 h] 10 c} 40 d} Not enough information to determine the xed cost. 2. If the market price is$42and this rmis currently producingI-II units of good this rm should .This firm is earning or could be earning the maximum prots of a} decrease the quantity produced to maximize its prot I $430 13} increase the quantity produced to maximize its prot 3" $1260 c] maintain the quantity produced as it has already maximized its prot f$260 d} decrease the quantity produced to maximize its prot f $360 Exercises Question 1 (Cournot Model with Two Identical Firms) Suppose there are two firms - A and B - competing as Cournot duopolists. The demand curve of this good is given by P = 100 - Q, where Q is the total quantity in the market. Both firms have the identical cost structure such that each unit of good costs AC = MC = 40. Graphically explain your answers in each step. 1. Suppose currently there is only one firm in the market, what is the quantity this monopolist would produce? What is the profit for this monopolist? 2. Find the quantity that would be sold if this market were to be a perfectly competitive market. 3. Find the equations of reaction functions of both firms. 4. What are the quantities sold by each firm when they compete as Cournot duopolists? 5. What are the profits of each firm when they compete as Cournot duopolists? 6. If the two firms were to collude, what would be the quantity sold in the market? What would be the profits of each firm? Compare your findings to when they compete as Cournot duopolists. Question 2 (Cournot Model with Two Non-Identical Firms) Suppose there are two firms - A and B - competing as Cournot duopolists. The demand curve of this good is given by P= 120 - Q, where Q is the total quantity in the market. Suppose firm A is more efficient and its cost structure is given by AC = MC = 20, while firm B is less efficient and AC = MC = 40. 1. Find the equations of reaction functions of both firms. 2. What are the quantities sold by each firm when they compete as Cournot duopolists? 3. What can you conclude from your findings? Question 3 (Cournot Model with Missing Cost Information) Suppose the reaction functions of two firms are given by qa = 10 - 0.5qs and qs = 10 - 0.5ga. The market demand is known as P = 50 - Q. Assuming that both firms have constant and identical marginal cost, what is the marginal cost for both firms?1. Prisoners' Dilemma Country A and Country B can decide to build "Nuclear" or "Non-nuclear" weapons. If both countries decide to build nuclear weapons, they are wastefully utilizing the resources. If both decide not to build nuclear weapons, they employ their resources somewhere efficient. If one country has the nuclear weapon but the other has not, the country that has the nuclear weapon is more powerful, while the country that has no nuclear weapon is prone to being attacked. Country B Nuclear Non-nuclear Country A Nuclear 0,0 4, -4 Non-nuclear -4 , 4 2, 2 Find the dominant strategy equilibrium, Nash equilibrium, collusion equilibrium and Maxmin strategy equilibrium, if any exists. 2. Chicken Game Two drivers are driving from the opposite ends on the center of an unmarked road. As they come into visual, they can choose to swerve from each other or drive straight. Swerving the car takes effort but the crash is avoided with certainty, and accident can also be avoided if one driver swerves but the other drive straight. However, if both drive straight, they will crash. Driver B Swerve Drive Straight Driver A Swerve -1, -1 -2,0 Drive Straight 0, -2 -10, -10 Find the dominant strategy equilibrium, Nash equilibrium and Maxmin strategy equilibrium, if any exists. 3. Battle of the Sexes The couple is considering what to do on their date night but they don't know what they have agreed upon. The girl prefers to Netflix but the guy prefers to Chill. They have to choose the same activity to enjoy their time, even if one prefers the other activity. If they don't choose the same activity, they both lose. Business Learning Center - Econ 101 (Hansen) - Handout 17 (December 2, 2015) Tutor: Kanit Kuevibulvanich The Girl Netflix Chill The Guy Netflix 1, 2 Chill 0,0 2 , 1 Find the dominant strategy equilibrium, Nash equilibrium, Collusion equilibrium and Maxmin strategy equilibrium, if any exists. 4. Rock-Paper-Scissors A rock-paper-scissors game can be written in the game matrix as the following Player B Rock Paper Scissors Rock 0,0 -1, 1 1, -1 Player A Paper 1 , -1 -1, 1 Scissors -1, 1 1, -1 0,0 Find the dominant strategy equilibrium and Nash equilibrium, if any. 5. Find the dominant strategy equilibrium, Nash equilibrium, collusion equilibrium and Maxmin strategy equilibrium, if any exists. Player B Player B Left Right Left Right 0,0 1,0 Player A Up 2, 1 Up Down -1, -1 1, 2 Player A 1, 1 Down -5,0 5,1 Problem 2 Consider the following game table, then answer the questions Player 2 Left Right Player 1 Up 1 , - -1 , 1 Down X, Y 1, -1 1. Find Nash equilibrium if X = -1 and Y = 1. 2. For what value of X is "Down" the dominant strategy for Player 1? 3. For what values of Y is "Left" the dominant strategy for Player 2? 4. For what values of X guarantees that "Up" is the Maxmin strategy for Player 1? 5. For what values of Y guarantees that "Right" is the Maxmin strategy for Player 2? 6. For what values of X guarantees that "Down" is the Maxmin strategy for Player 1?Question 5 (Elasticities) 1. If the price of a good has increased from $10 to $20, causing the quantity demanded of this good to decrease from 100 to 80 units, find the price elasticity of demand using midpoint formula? Is this demand for this good currently elastic or inelastic? 2. What do you expect the sign (positive/ negative) of cross-price elasticity of demand between Coke and Pepsi? Explain this when the price of Pepsi increases. What happens to the producer surplus of Coke when the price of Pepsi increases? 3. If the cross-price elasticity of demand between good A and good B is -0.05, what can we say about the relationship of the two goods? 4. If income elasticity of demand for good X is -2, what can we say about this good? 5. At what price does the monopolist facing a demand curve of P = 100 - 2.7182818284590450 maximize his revenue? What is the price elasticity of demand at that price? Question 6 (Consumer Theory) 1. What happens to the budget line when prices of both goods and income all triple? 2. Suppose good X and good Y are indivisible, that is, must be consumed in exact units. Quantity Good X Good Y (Units) Total Marginal Total Marginal Utility Utility Utility Utility 0 0 0 50 10 2 80 60 3 100 70 110 75 a. Fill in the marginal utilities in the table above. Suppose the price of good X is $5, the price of good Y is $10 b. If the income is $40, what is the optimal consumption bundle of good X and Y? c. If the income is $25, what is the optimal consumption bundle of good X and Y? d. If the income is $30, what is the optimal consumption bundle of good X and Y? 3. If price of good X is $10, and price of good Y is $20 a. What is the marginal rate of substitution of the optimal consumption bundle? b. If currently the marginal rate of substitution (MUx/ MUY) is 4, then one is consuming [ too much / too few ] of good X and [ too much / too few ] of good Y. c. If currently the marginal rate of substitution (MUx/MUY) is 0.5, then one is consuming [ too much / too few ] of good X and [ too much / too few ] of good Y. 4. The marginal rate of substitution is given by MRS = MUx/MUY = 3Y/X. If prices of good X and good Y are $10 and $5, respectively, and you have the income of $120, what is your optimal consumption bundle? Draw the solution in the budget line and indifference curve