1. Is there a Nash Equilibrium of this game in which Fiji improves its payoffs relative to the Sub-game Perfect Nash equilibrium? If there is, explain carefully why this strategy profile is not a Sub-game Perfect Nash equilibrium.

1. What do we mean by market power in economics? What are some ways firms can attain market power? How can we, as economists, know when a firm has "too much" market power? Give an example of a firm you think has a lot of market power.2. Chapter 3 is all about game theory. Imagine you are in charge of pricing at a firm that has 20% market share in an industry where the leading firm has 50% market share. Imagine that the leader increases prices on their products. How do you think you would react? Why?

1. Consider the following game matrix. Player A Answer: Top Bottom Left a, b e, f Player B Right c, d g, h (a) If top and left are strictly dominant strategies, then what do we know the relationship of the parameters? (b) If (top, left) is a Nash equilibrium, then what do we know the relationship of the parameters? Answer: (c) If top and left are strictly dominant strategies, will (top, left) be a Nash equilibrium? Why? Answer: (d) If (top, left) is a Nash equilibrium, must the strategies be strictly dominant strategies? Why? Answer:

Question > Consider the following matrix game where Player 1 moves first then Player 2 observes player 1's move and responds. Draw the game tree for the sequential move game and then determine all the Nash equilibria. Player 1 Strategy A Strategy B Strategy C Strategy D -3, -2 10, 12 9, 20 Player 2 Please show each step on how to get the answer. Thank you! Strategy E 13,7 17, 17 12, 21 Strategy F 20,8 22, 16 19, 19

3. Consider the following game: K Out 2 2 1 9 Player 1 Player 1 X In A Y Player 2 0 2 B 5 5 a) Does the game have perfect information? Why/why not? b) Circle the subgames. c) Find all backward induction solutions. d) Below are written five strategy profiles. One of them is a subgame perfect equilibrium; circle it! One of them is not a Nash equilibrium; write "X" across it! ((Out, X), A) ((Out, Y), A) ((In, Y),B) ((Out, Y), B) ((In, X),B)

12. What is the subgame-perfect outcome from a finitely repeated game? a. Iterated Elimination Outcome played in each stage b. Backwards Induction Outcome played in each stage Nash Equilibrium played in each stage d. Nash Equilibrium in stage 1 only