Any parts appreciated the more the better. 6. a. Consider the following sequential game.Player 1APlayer 2Player 1(G)aaPlayer 2(4)yi.Determine the subgame perfect Nash equilibria and their outcomes.ii.Determine the Nash equilibria of the game. For each of the Nash equilibria, arguewhy no player has a profitable deviation.ii.Determine which parts of the Nash equilibrium strategies involve uncredible threats.b. Suppose a perfectly competitive firm has the production function y = (aK + (1 – a)L)where ß > 0 and a € (0,1). The price of labour per unit is w, the price of capital per unit is v andthe price of output is p.i. Draw an isoquant of the firm. Determine the possible combinations of (K, L) that the firmcan choose to minimise costs to produce y = y,?ii.Assume that a #Determine the output supply function y(a, ß, p, v, w). For whatw+vvalues of ß is the output supply function valid? Explain your answer.

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6. a. Consider the following sequential game.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.6P

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Question

Any parts appreciated the more the better.

6. a. Consider the following sequential game.
Player 1
A
Player 2
Player 1
(G)
a
a
Player 2
(4)
y
i.
Determine the subgame perfect Nash equilibria and their outcomes.
ii.
Determine the Nash equilibria of the game. For each of the Nash equilibria, argue
why no player has a profitable deviation.
ii.
Determine which parts of the Nash equilibrium strategies involve uncredible threats.
b. Suppose a perfectly competitive firm has the production function y = (aK + (1 – a)L)
where ß > 0 and a € (0,1). The price of labour per unit is w, the price of capital per unit is v and
the price of output is p.
i. Draw an isoquant of the firm. Determine the possible combinations of (K, L) that the firm
can choose to minimise costs to produce y = y,?
ii.
Assume that a #
Determine the output supply function y(a, ß, p, v, w). For what
w+v
values of ß is the output supply function valid? Explain your answer.

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