The demand for a commodity is given by Q = B₁ + B₁P+u, where Q denotes quantity, P denotes price, and u denotes factors other than price that determine demand. Supply for the commodity is given by Q=% + v, where v denotes factors other than price that determine supply. Suppose that u and u both have a mean of zero, have variances o2 and 2, and are mutually uncorrelated. Solve the two simultaneous equations to show how Q and P depend on u and v.

Two identically able agents are competing for a promotion. The promotion is awarded on the basis of output (whomever has the highest output, gets the promotion). Because there are only two workers competing for one prize, the losing prize=0 and the winning prize =P. The output for each agent is equal to his or her effort level times a productivity parameter (d). (i.e. Q2=dE1 , Q2=dE2). If the distribution of “relative luck” is uniform, the probability of winning the promotion for agent 1 will be a function of his effort (E1) and the effort level of Agent 2 (E2). The formula is given by...Prob(win)=0.5 + α(E1-E2), where α is a parameter that reflects uncertainty and errors in measurement. High measurement errors are associated with small values of α (think about this: if there are high measurement errors, then the level of an agent’s effort will have a smaller effect on his/her chances of winning). Using this information, please answer the following questions. Both workers have a…

Static Bayesian Games] We consider a games with 2 players. Player 1 has only asingle type; however, Player 2 can have two types I and D, each with probability 50%. Bothplayers have two actions available to them. The game has the following payoffs (P1 is the rowplayer, P2 the column player):

Which distribution is a probability distribution with a low mean and highly skewed to the right? Which distribution is a probability distribution with a low mean and highly skewed to the right? Level distribution Normal distribution Poisson distribution Uniform distribution