Concept: Coase Bargaining Farmer Owens has an apple orchard that must be pollinated by bees in order to bear frut. Farmer Owens's neighbor, Maude, owns beehives with bees that can pollinate the apple trees Suppose the benefit of the bees to Farmer Owens is $2,000 per year. Suppose the bees provide no benefit to Maude but she must pay $3,000 per year to maintain the hives. If Farmer Owens and Maude engage in Coase bargaining, what would likely result? OA Farmer Owens would pay Maude between $2.000 and $3,000 to maintain the hives. B. Maude would pay Farmer Owens between $2,000 and $3,000 to maintain the hives. OC. Farmer Owens would pay Maude at least $3,000 to maintain the hives. OD. Farmer Owens would not be willing to pay Maude an amount such that she would maintain the hives Ot. Farmer Owens would pay Maude between $0 and $2,000 to maintain the hives Click to select your answer and then click Check Answer All parts showing Clear All

Concept: Coase Bargaining Farmer Owens has an apple orchard that must be pollinated by bees in order to bear frut. Farmer Owens's neighbor, Maude, owns beehives with bees that can pollinate the apple trees Suppose the benefit of the bees to Farmer Owens is $2,000 per year. Suppose the bees provide no benefit to Maude but she must pay $3,000 per year to maintain the hives. If Farmer Owens and Maude engage in Coase bargaining, what would likely result? OA Farmer Owens would pay Maude between $2.000 and $3,000 to maintain the hives. B. Maude would pay Farmer Owens between $2,000 and $3,000 to maintain the hives. OC. Farmer Owens would pay Maude at least $3,000 to maintain the hives. OD. Farmer Owens would not be willing to pay Maude an amount such that she would maintain the hives Ot. Farmer Owens would pay Maude between $0 and $2,000 to maintain the hives Click to select your answer and then click Check Answer All parts showing Clear All

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Q. 1
Consider the following game played between the developed country (Player A) and the developing country (Player B). Player B Harness pollution Doesn't harness pollution (a) Find the Nash equilibrium of the game. Offer assistance 10, 8 8, 9 |(b) Now, suppose the game is played an infinite number of times. Suppose the discount factor is 2/3 for both countries. Explain if grim strategies can sustain the outcome (offer assistance, harness pollution) emerging as a Nash equilibrium outcome every time the game is being played. Doesn't offer assistance 15,3 9,4
Consider a small town with two competing restaurants: Doug’s Diner and Betty’s Bistro. There is 1000profit to be made in the market. Each period, the restaurants simultaneously decide whether to offer high orlow quality food. In order to offer high quality food, each restaurant must hire an expert chef, which incursan additional cost of 100. The restaurants split the profit equally if they offer the same quality of food. Ifone restaurant offers high quality food while the other offers low quality food, the high quality restauranttakes four fifths of the profit and the low quality restaurant takes one fifth of the profit.(a) Draw up the normal form game matrix, showing the players, strategies, and payoffs.(b) Determine the Nash equilibrium of this game.(c) Explain how the restaurant owners could both be better off than in the Nash equilibrium if they wereable to cooperate. Is the town as a whole better off or worse off when the firms cooperate? Why or whynot
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2. Film producer S costs c=20 to produce one film. B, an online movie distributor, earns v=120 if the movie is distributed. In order for B to distribute the movie, it must be purchased from S. If there is no transaction between S and B, each earns a profit of zero. Find the sum of S's profit and B's profit by the transaction price formed when S and B's bargaining power is 50:50.
For the game given, find all values for x and y such that it is a Prisoners’ Dilemma. Find all values for x and y such that it is a coordination game.
Describe the Nash equilibrium/a and the mutually-preferred outcome. Finally, consider how people are sometimes able to resolve this social dilemma in the real world. Clearly explain how this method is successful in moving the players to a socially optimal outcome.
Consider the following stage game: Player 2 C2 D2 A2 C1 8,8 0,9 | 0,0 D1 9,0 0,0 | 3,1 Player 1 A1 0,0 1,3| 3,3 Assuming that it is played twice, describe a subgame-perfect equilibrium in which (C1, C2) is selected in the first period.
6. Consider the following two-player game: 2 L M U 3,3 2,3 1 M 2,1 3,1 D R 0,2 3,3 0,3 3,0-5, -5 a. Find all pure NE. b. Find a (non-pure) MNE in which player 1 (the row player) plays a pure strategy. c. (Harder Question) Show that there cannot be a CE prescribing that strat- egy D of player 1 (the column player) is played with positive probability.
(1) Two firms (A and B) that produce timber products pollute a local forest with pesticides used to grow trees. Currently, firm A releases 100 pounds of pesticide waste into the forest per month, while firm B releases 140 pounds of pesticide waste into forest per month. The table below shows the cost of reducing pesticide waste by increments of 10 pounds for each firm. For each firm, reductions beyond 50 pounds would be virtually impossible to accomplish and expensive if it is to stay in business, because some pesticide must be used. Total cost of reducing Firm A pesticide waste by 10 pounds 20 pounds 30 pounds 40 pounds 50 pounds Firm B $6 $4 $18 $12 $36 $24 $60 $40 $90 $64 Suppose the government wants to reduce pesticide waste level to 180 pounds. That is, the government wants to reduce pesticide waste from its current monthly level to 180 pounds per month. To achieve this goal, the government decides to issue permits to pollute. A total of 18 permits are issued, where each permit…
Consider the following simplified scenario. Imagine that the Australian national rugby union(for short, Rugby AU) has exclusive rights to organize the games played by the national team.Rugby AU decides that the next match, between the Wallabies and the All Blacks (i.e., theAustralian and the New Zeeland national rugby teams), will be hosted at the Marvel Stadiumin Melbourne. Rugby AU has no fixed costs for organizing the game, but it must pay a marginalcost MC of $20 per seat to the owners of the Marvel Stadium. Two types of tickets will be soldfor the game: concession and full fare. Based on any official document that attests to their age,children and pensioners qualify to purchase concession tickets that offer a discounted price;everyone else pays the full fare. The demand for full-fare tickets is QF(P) = 120 – 2P. Thedemand for concession tickets is QC(P) = 80 – 2P. j) Suppose that Rugby AU becomes unable to verify the age of its customers; thus, theformerly distinct full fare and…
2. Consider the following two-player game with two players: Adam and Eve. Adam A1 A2 A3 A4 E1 6,3 5, 3 5, 0 2,0 E2 4,4 5, 4 3, 2 2, 3 Eve E3 4, 1 0,2 6, 1 3, 4 E4 3,0 5, 1 4,0 6₂ 1 a. Find the Iterated Elimination of Dominant Strategies Equilibrium for this game. Explain.