6. Chevron and Arco are two petrol stations in direct competition with each other. Each firm can set a low price or a high price. If they each set a high price, they will split the market. If they each set a low price, they will split the market again, but at a lower profit. If one firm sets a low price and the other sets a high price, the low-price firm will capture all customers. ii) iii) Arco A B Chevron A 10,10 15,0 B 0,15 5,5 What is the Nash equilibrium if this game is played once? If this game is repeated indefinitely what will happen? If there is a prediction that the world will end in December 2023. Both the manager of Chevron and Arco firmly believe this. Does your result in b change?

7. The table below shows the annual profits of two UK paint manufacturers. At present they both charge £20.00 per litre for gloss paint. Their annual profits are shown in box A. The other boxes show the effects on their profits of one or the other, or both firms reducing their price to £16.00 per litre. £20.00 Fenton's price i. ii. £16.00 A B £20.00 £6m each Mellow's price £9m for Fenton £3m for Mellow с £16.00 £3m for Fenton £9m for Mellow £4m each (a) Which of the two prices should Mellow charge if it assumes that Fenton will set its price at £20?. it assumes that Fenton will set its price at £16? ... (b) Which of the two prices should Fenton charge if i. ii. it assumes that Mellow will set its price at £20? it assumes that Mellow will set its price at £16? (c) Why is this known as a dominant strategy game? £20.00/£16.00 £20.00/£16.00 £20.00/£16.00 £20.00/£16.00 (d) Assume now that the 'game' between Fenton and Mellow has been played for some time with the result that they both learn…

5. Individual Problems 9-5 Describe the difference in economic profit between a competitive firm and a monopolist in both the short and long run. Which should take longer to reach the long-run equilibrium? In the short run, both monopolists and competitive firms can competitive firms, but not monopolists earn positive economic profits. In the long run, can earn a positive economic profit. True or False: The adjustment to long-run equilibrium takes the same amount of time for monopolies and competitive industries. True O False

1. When a monopoly advertises, the goal is to _____ because _____. Group of answer choices increase its demand as a share of market demand; the monopoly faces a significant portion of market demand increase market demand; the monopoly faces the entire market demand increase market demand; the monopoly produces a product that is identical to the output of all other sellers in the market increase its demand as a share of market demand; the monopoly faces a small portion of market demand   2. If given a choice, a person would prefer to experience the situation of which of the following families? Group of answer choices a family with income equal to the world poverty line a family with income equal to the United States poverty line a family with income double the world poverty line a family with income equal to the poverty line in the United States in 1970   3. A business using its bargaining power as a major buyer of labor to pay lower prices, including lower wages,…