Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
20th Edition
ISBN: 9780078021756
Author: McConnell, Campbell R.; Brue, Stanley L.; Flynn Dr., Sean Masaki
Publisher: McGraw-Hill Education
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Chapter 4.A, Problem 3ARQ
To determine
True or false.
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5. Suppose there is a Chinese firm that could produce a "widget" at a cost of 9qw, where qw is the
number of widgets. It can then ship these widgets to a U.S. firm at a transport cost of $1 per
unit and for a price of pw. The U.S. firm can then turn one widget into one car at a cost of $10.
Cars are then sold on the world market, where inverse demand for cars is given by:
P = 500-2Q.
(a) If the Chinese firm is a perfect competitor, what is
P =
TU.S. =
Q =
qw=
Pw=
Chinese =
(b) If the Chinese firm is a monopolist, what is
P =
=
TU.S.
Pw=
qw=
TChinese =
B3) We have a group of three friends: Kramer, Jerry and Elaine. Kramer has a $10 banknote
that he will auction off, and Jerry and Elaine will be bidding for it. Jeny and Elaine have to
submit their bids to Kramer privately, both at the same time. We assume that both Jerry and
Elaine only have $2 that day, and the available strategies to each one of them are to bid either
$0. $1 or $2. Whoever places the highest bid, wins the $10 banknote. In case of a tie (that is,
if Jerry and Elaine submit the same bid), each one of them gets $5. Regardless of who wins
the auction, each bidder has to pay to Kramer whatever he or she bid.
4. Consider a three-player bargaining, where the players are negotiating over
a surplus of one unit of utility. The game begins with player 1 proposing
a three-way split of the surplus. Then player 2 must decide whether to
accept the proposal or to substitute for player 1's proposal his own alternative
proposal. Finally, player 3 must decide whether to accept or reject current
proposal (it is player 1's if player 2 accepts or player 2's if player 2 offer a
new one). If he accepts, then the players obtain the specified shares of the
surplus. If player 3 rejects, then the players each get 0.
(a) Draw the extensive form game of this perfect-information game.
(b) Determine the subgame perfect NE.
Chapter 4 Solutions
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
Ch. 4.A - Prob. 1ADQCh. 4.A - Prob. 2ADQCh. 4.A - Prob. 3ADQCh. 4.A - Prob. 1ARQCh. 4.A - Prob. 2ARQCh. 4.A - Prob. 3ARQCh. 4.A - Prob. 1APCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQ
Ch. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7P
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