You and your classmate are assigned a project on which you will receive one combined grade You want to receive good grade, but you also want to avaoid hard work in particular, here is the situation If both work hard you both get an A , which gives each of you 40 units of happiness If only one of you work hard, you both get B, which gives each of you 30 units of happiness If neither of you work hard, you both get D, which gives you 10 units of happiness Prepare a pay off matrix of the game what would be likely outcome Explain your answer If you get this classmate as partner on a series of projects throughout the year, rather than only once, how might that change the outcome you predicted Let us consider a market entry game Suppose a firm like tata tries to introduce a new small car, where Maruti currently is the only provider of small car In the game tata can enter or not enter and maruti can advertise or not advertise to maintain its market share If Tata does not enter Maruti gets the entire market It is assumed that Maruti gets profit of 6 if it does not advertise and a profit of 4 if it advertise If tata does not enter its profit is zero If tata enters and Maruti does not advertises then the profit are 3 for Maruti and 1 for TATA If tata enters and Maruti advertises Maruti keeps some of its customers but at the expense of an advertising cost and hence the profits are 1 for Maruti and 1 for tata Assume that each firmknows own payoff as well as its rival Draw a payoff matrix of this game Determine dominant strategy and nash equilibrium in this game Stylo limited has demand function got his product in the domestic market as follows P1 80 5Q1 The demand function the demand function for selling in the international market is given by P2 180 20 Q2 The total cost function is given as C 50 20(Q1 Q2) Determine the price that will be charged by the stylo ltd To maximise profit when the domestic price is discriminated from the international price Determine the price that will be charged by Stylo ltd to maximise profit when there is no price discrimination The difference in the profit of Stylo ltd In case of discrimination and non discrimination The sale of a good for the current year reduced to 60000 units from 80000 units during the last year During the current year the price of the good has been increased by 30 from 10 Rs The demand for the good is unitary elastic and cross elasticity of demand is estimated to be 5 During the same period income level in the economy increased by 1 , while the price of substitute good increased by 2 Compute the income elasticity of demand for the good and comment on the nature of the good Can the firm increase the total sales revenue by reducing the price Why or why not The firm wants to increase the sales to its previous level of 80000 units what should the firm do An Industry has 100 firms 50 are located in Faridabad and 50 in Jaipur All the output is sold only at delhi Cost of transportation is Rs6 per unit from Faridabad to delhi and Rs 10 from Jaipur to delhi Cost function of all firms in the industry is identical and is given by C 0 5Q 2 The industry demand function is Qd 1600 20p What is the equilibrium price for the industry What is the output supplied by each firm at Faridabad and Jaipur What are the profits earned by the ach firm at Faridabad and Jaipur We have discussed that multi plant monopolist and cartel that acts like a monopoly Assume that monopolist is operating with two plants Can you superimpose the equilibrium price and quantity determination of a Multiplant case into cartel with two firms Draw a figure in support of your answer Because of Economies of Scale, it is sometime more cost effective for firm to operate a large plant at less than maximum efficiency than a small plant at maximum efficiency Do you agree with this statement Explain You can use graphs to substantiate your opinion Substitutes becomes expensive when price of a commodity rises can be explained through a downward sloping demand curve Sweezy's model fails to explain the effect of the discovery that the firm's belief about the demand curve is incorrect For a linear production function, if the slope of the isoquants is equal to the slope of the isocost, there cannot be unique equilibrium solution Because of Economies of Scale, it is sometime more cost effective for firm to operate a large plant at less than maximum efficiency than a small plant at maximum efficiency Do you agree with this statement Explain You can use graphs to substantiate your opinion

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You and your classmate are assigned a project on which you will receive one combined grade . You want to receive good grade, but you

You and your classmate are assigned a project on which you will receive one combined grade . You want to receive good grade, but you also want to avaoid hard work in particular, here is the situation

If both work hard you both get an A , which gives each of you 40 units of happiness

If only one of you work hard, you both get B, which gives each of you 30 units of happiness

If neither of you work hard, you both get D, which gives you 10 units of happiness

Prepare a pay off matrix of the game. what would be likely outcome? Explain your answer. If you get this classmate as partner on a series of projects throughout the year, rather than only once, how might that change the outcome you predicted ?

Let us consider a market entry game. Suppose a firm like tata tries to introduce a new small car, where Maruti currently is the only provider of small car. In the game . tata can enter or not enter and maruti can advertise or not advertise to maintain its market share. If Tata does not enter. Maruti gets the entire market. It is assumed that Maruti gets profit of 6 if it does not advertise and a profit of 4 if it advertise .

If tata does not enter its profit is zero. If tata enters and Maruti does not advertises then the profit are 3 for Maruti and 1 for TATA. If tata enters and Maruti advertises .Maruti keeps some of its customers but at the expense of an advertising cost and hence the profits are 1 for Maruti and 1 for tata. Assume that each firmknows own payoff as well as its rival.

Draw a payoff matrix of this game

Determine dominant strategy and nash equilibrium in this game.

Stylo limited has demand function got his product in the domestic market as follows P1=80-5Q1. The demand function the demand function for selling in the international market is given by P2=180-20 Q2. The total cost function is given as C=50+20(Q1+Q2)

Determine the price that will be charged by the stylo ltd. To maximise profit when the domestic price is discriminated from the international price.

Determine the price that will be charged by Stylo ltd to maximise profit when there is no price discrimination.

The difference in the profit of Stylo ltd . In case of discrimination and non-discrimination.

The sale of a good for the current year reduced to 60000 units from 80000 units during the last year. During the current year the price of the good has been increased by 30% from 10 Rs. The demand for the good is unitary elastic and cross elasticity of demand is estimated to be 5. During the same period income level in the economy increased by 1%, while the price of substitute good increased by 2%

Compute the income elasticity of demand for the good and comment on the nature of the good?

Can the firm increase the total sales revenue by reducing the price? Why or why not ?

The firm wants to increase the sales to its previous level of 80000 units what should the firm do?

An Industry has 100 firms . 50 are located in Faridabad and 50 in Jaipur. All the output is sold only at delhi. Cost of transportation is Rs6 per unit from Faridabad to delhi and Rs 10 from Jaipur to delhi. Cost function of all firms in the industry is identical and is given by C=0.5Q^2. The industry demand function is Qd=1600-20p
What is the equilibrium price for the industry?
What is the output supplied by each firm at Faridabad and Jaipur?
What are the profits earned by the ach firm at Faridabad and Jaipur ?

We have discussed that multi-plant monopolist and cartel that acts like a monopoly. Assume that monopolist is operating with two plants. Can you superimpose the equilibrium price and quantity determination of a Multiplant case into cartel with two firms? Draw a figure in support of your answer.

Because of Economies of Scale, it is sometime more cost effective for firm to operate a large plant at less than maximum efficiency than a small plant at maximum efficiency". Do you agree with this statement? Explain. You can use graphs to substantiate your opinion.

Substitutes becomes expensive when price of a commodity rises can be explained through a downward sloping demand curve.?
Sweezy's model fails to explain the effect of the discovery that the firm's belief about the demand curve is incorrect.?
For a linear production function, if the slope of the isoquants is equal to the slope of the isocost, there cannot be unique equilibrium solution.

Because of Economies of Scale, it is sometime more cost effective for firm to operate a large plant at less than maximum efficiency than a small plant at maximum efficiency". Do you agree with this statement? Explain. You can use graphs to substantiate your opinion.