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Intermediate MicroeconomicsProblem Set 10.Submission options:• in person during lectures or TA sessions;• in Xiaoye Liao’s mail box at 19 West 4th, 6th Floor;• (less recommended) e-mail Xiaoye Liao atxl775@nyu.edu– in that case, be sure to use the subject line: “Submission Problem Set 10â€.Exercise 1Consider a game of rock-scissor-paper. There are two players, player 1 and player 2,and the winner receives $1 from the loser (if they draw, nothing happens). They playthis game simultaneously.1. What kind of game is this? Express this game in normal form.2. What are the set of possible actions and strategies?3. Find all Nash equilibria of this game.Exercise 2Consider a game represented by the following payoff matrix. Find all pure strategyNash equilibria. UMD LCR?10, 0 ?10, ?1 ?10, ?1?8, ?8 0, ?102, ?14, 57, ?101, 1 Exercise 3Consider a game represented by the following payoff matrix. There are two firmscompeting in a duopoly market. Each should decide how much to produce simultaneously and their profits are given in the matrix. Find all pure strategy Nash equilibria.25355010025125, 125100, 14063, 125?63, ?25035140, 100105, 10553, 75?123, ?35050125, 6375, 530, 0?250, ?500100 ?250, ?63 ?350, ?130 ?500, ?250 ?900, ?900 1 Exercise 4Consider two players simultaneously deciding whether to contribute to a public good— the good is said to be public because, if it is made available, a player who free-ridesby paying nothing gets just as much pleasure from its enjoyment as a player who paidfor it. If at least one player contributes to the construction of the public good, bothplayers will enjoy a payoff of four from the public good. To ensure the public goodis constructed, player 1 must pay c1 or player 2 must pay c2. Assume that c1
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- Scenario The government of the island nation of Autarka has become increasingly concerned about the health and wellbeing of low-income households. Medical experts stress the importance of a healthy diet in this regard. They have determined that, ideally, a household would consume at least 10kg of fresh fruit and vegetables each week. The government has proposed implementing a new voucher scheme to ensure that the 10kg per week consumption target is met. Under the government’s proposal, the vouchers would be redeemable for fresh fruit and vegetables, but could not be used for other types of food, or for non-food consumption. Moreover, to limit the cost of the voucher scheme, the value of the vouchers sent to a household would be linked to the household’s income. Community groups in Autarka have expressed concern that a voucher scheme is unnecessarily paternalistic; depriving low-income households of the choice of how to spend their income. These groups argue that the government’s…arrow_forwardTim Geithner, a former U. S. Treasury Secretary, has said, "The recession that began in late 2007 was extraordinary severe. But the actions we took at its height to stimulate the economy helped arrest the free fall, preventing an even deeper collapse and putting the economy on the road to recovery." Which two of the three principles of economy-wide interaction are at work in this statement?arrow_forward
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