QUESTION 1

Use the economic theories to determine whether the statement in each question is True, False or Uncertain. Please explain using both words, graph(s) and where appropriate math is required plz use. Plz give detailed answer

If there is a monopoly provider of an essential service it would be better to regulate the price at the average cost of production rather than at the marginal cost of production.

QUESTION 1

Use the economic theories. Please explain using both words, graph(s) and where appropriate math is required plz use. Plz give detailed answer

Bob and Sue are trying to determine whether or not to get vaccinated against ClamShell Sickness. If neither of them get vaccinated, the probability of getting sick is 0.05%. If both of them get vaccinated, the probability of getting sick is 0.01%. If only one gets vaccinated, then the person not vaccinated has a 0.03% chance of getting sick, while the person who is vaccinated has a 0.02% chance of being sick. a. Provide the payoff matrix for this scenario. If this were a simultaneous one shot game - explain the equilibrium/equilibria. b. Would the outcome change if the scenario were played out sequentially - i.e. Bob gets to choose first and then Sue? Explain. c. Does this scenario depict a positive externality? Explain.