Question:

Consider the following variant of the Dixit model that we discussed in class: In the market for microwaves, there is an incumbent (firm 1) and a potential entrant(firm 2). The demand function is given by: P = 60?0.01(q1 +q2) where q1 is the output of the incumbent and q2 is the output of the entrant. Firms need two units of labourand one unit of capital to produce one unit of output. Labour costs w = 10 per unit and capital costsr = 15 per unit. In addition, the entrant has to pay a fixed cost of F2 to enter this market. At period T = 1, the incumbent chooses a level of capital investment K?1 and at time T = 2, firms compete in quantities by buying inputs and producing outputs

a)What is the range of possible levels of investment for firm 1 that could be a part of the equilibrium for this game? That is, what is the lowest K?1 that could be an optimal choice for firm 1 for some values of firm 2's fixed cost F2? What is the highest K?1 that firm 1 could optimally choose?

b)What is the equilibrium outcome and profits of this game if the entrant has fixed costs F2 = 1000?

c)What is the equilibrium outcome and profits of this game if the entrant has fixed costs F2 = 2500?

d)What is the equilibrium outcome and profits of this game if the entrant has fixed costs F2 = 4000?

Please answer all parts with a step by step explanation in detail.

A five-year corporate bond and its benchmark government bond had the following yields over a one-month period: Beginning of Month End of Month Corporate bond yield 6.75% 7.00% Government bond yield 4.25% 4.75% Over this month, the price of the corporate bond most likely experienced: A) unfavorable macroeconomic and microeconomic factors, B) favorable macroeconomic factors and unfavorable microeconomic factors. C) unfavorable macroeconomic factors and favorable microeconomic factors.le Edit View History Bookmarks Window Help A ecourses.pvamu.edu 9_ECON2113P04-2010-12775 What is the best way to describe the differences between microeconomics and macroeconomics? Select one: a. There are no differences between how resource allocation decisions are made in microeconomics and macroeconomics. b. Microeconomics analyzes the impact of the government's decision to raise or cut taxes on household and business spending and savings. Microeconomics focuses on the spending behavior and resource-allocation decisions of individual households and business, while macroeconomics deals with all resource-allocation decisions in an aggregate economy. d. Macroeconomics analyzes the impact of how many goods and services a firm produces and how the supply of and demand for those goods and services influence their prices and quantity. e. Macroeconomics focuses on the spending behavior and resource-allocation decisions of individual households and business, while microeconomics deals with all resource-allocation decisions in an 13 MacBook