Please answer the following as best as you can and thank you in advance

25) Examine the following statements:

a)"If a product has a positive externatlity effect when consumed, then there will be an over-production of the product and the government needs to use a tax to correct the allocative inefficiency."TRUE or FALSE and explain.

b)"If the government imposes a sales tax on a perfectly price elastic product, the burden of the tax is fully on the producer."TRUE or FALSE and explain.

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GAME THEORY AND OLIGOPOLY.Profit payoff Matrix for Home Depot and Rona.Below is the profit payoff matrix for these two building supply stores on whether they set their plywood price HIGH or LOW

TABLE 1

Rona LOW price

Rona HIGH price

Home Depot LOW price

$40 million for Rona

$38 million for Home Depot

$45 million for Rona

$30 million for Home Depot

Home Depot HIGH price

$30 million for Rona

$30 million for Home Depot

$35 million for Rona

$39 million for Home Depot

Using Table, what if any is thecollusive outcome?Explain whether it will occur.

Using Table, what if any is theNash equilibrium?Explain whether it will occur.

TABLE 2

Rona LOW price

Rona HIGH price

Home Depot LOW price

$21 million for Rona

$21 million for Home Depot

$36 million for Rona

$15 million for Home Depot

Home Depot HIGH price

$15 million for Rona

$36 million for Home Depot

$24 million for Rona

$24 million for Home Depot

What is meant by a dominant strategy?Using Table 2, is there adominant strategy?Explain if there is a Nash equilibrium and a collusive equilibrium?

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PPCIn Prince George, BC there are two major industries, producing good Y (Paper Mill) or good X (Silver Mine).The table shows the amount of each product which can be produced with the labour force.

Workers

0

10

20

30

40

50

60

70

80

Good X

0

70

130

180

220

250

270

280

285

Good Y

0

50

95

135

170

200

225

245

260

a)There arecurrently 70 workers.Create the production possibilities table.No graph required.

Good X

Good Y

b)Explain and calculate (i) the opportunity cost to produce70 more X, if you are already efficiently producing 180 of X, and (ii) the opportunity cost of producing35 more Y, if you are already efficiently producing 135 Y.

c)Explain and calculate, how your answer to b) would change if the labour population increased to80 Workers.