Marginal costs and total costs equal to zero. The industry demand is P = 100 ? Q where Q = Q1 + Q2 is total output.

1. Now, assume that players interact twice. Hence the game is a twice repeated game. Is it possible to have (cartel,cartel) as an outcome? Explain.

2. Now, assume that players interact infinitely. Hence the game is an infinitely repeated game. Is it possible to have cartel as an outcome using tit-for-tat? If yes, give the condition on the discount factor for which cartel is sustainable. Cartel is a sustainable outcome of the repeated game if while firm 2 plays grim-trigger, there exists no profitable one-shot deviation from tit-for-tat for firm 1. Since the firms are identical, you don't need to check the profitable deviations of firm 2. They will be the same. Let's start with completing the table below. Keep in mind that firm 2 is following tit-for-tat and firm 1 is deviating from tit-for-tat only in period 2.

3. Now, using the discount factor ? calculate the total payoffs from the two cases. You will need to use formulas for infinite series. Now, find ? values which make the total payoff from no deviation bigger than the total payoff from one-shot deviation. For these values of the discount factor, firm 1 will not deviate from tit-for-tat. Since firms are identical, the same condition applies to firm 2 as well.

September 30, 2018 at 12:00 AM According to World Systems theorists, the world system is driven by democratic relations among countries through international groups 2 conflict among stronger and weaker nations international agencies and organizations 4 cooperative economicssolution: Balance for trade payable in the trial balance at 1 october 20x0= 14000 CR Hence option B is correct. Sheet1110 Sheetllll Sheet1112 Sheet1113 Sheet1114 Sheet1115 Sheet1116 Sheet1117/_ e O 3 ENG 12-29 US 10/01/2019ECO 3703 International Economics Exercise 2-Foreign Exchange Scenario 1: On October 17, 2014, here are some selected foreign exchange rates quoted by a major international bank EUR/USD Spot 1.2774 Forwards 1 month 2.7 Futures Dec 14 1.2781 2 months 5.4 Mar 15 1.2790 3 months 8.2 Jun 15 1.2799 6 months 17.0 Sep 15 1 2814 1 year 44.9 USDIPY Spot 106:68(2 points) 8. Based on the value of the September 2014 futures contract, does the market expect the USD to appreciate or depreciate against the EUR in the spot market? (2 points) 9. If interest rates go up in Canada, do we expect the CAD to appreciate or depreciate against the USD in the spot market? (2 points) 10. If the government of Germany falls, do we expect the EUR to appreciate or depreciate against the USD in the spot market? (2 points) 11. If the Japanese government decides to ease its monetary policy, do we expect the JPY to appreciate or depreciate against the USD in the spot market? (2 points) 12. If the German government fell, would we expect EUR futures contracts to become more volatile or less volatile? (2 points)4. All goods in an economy are classified as agriculture (good 1) and manufacturing (good 2). These data are available for a country in the cases of autarky and of free trade. Price at Exports Imports Production Production autarky under free under free under under free trade trade autarky trade good 1 2 100 20 300 320 good 2 10 20 50 150 140 Calculate the gains from free trade, as the change to the welfare from autarky to free trade evaluated at autarky prices. Report the gains from free trade as a percentage of initial GDP (ie. total expenditures at autarky)