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Explain how an acceptable trading ratio is determined.
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- In an industry with two firms, their best responses are ? ∗ 1 = 10 ― (1/6)?2 and ? ∗ 2 = 8 ― (1/6)?1. What is the total quantity exchanged on the market?The principle of a Nash Equilibrium can be summarized as "Structure the law so as to remove the impediments to private agreements". True FalseA Nash equilibrium with a noncredible threat as a component is Multiple Choice a subgame perfect equilibrium. not a subgame perfect equilibrium. a sequential equilibrium. a somewhat subgame perfect equilibrium.
- Bargaining power may exist for a seller if they have another buyer to whom they can sell the product.True or False?Why do issues of bounded rationality and opportunism increase the costs of using contracts in market-based interaction?A game in which the players will not negotiate is a O A. zero-sum game. • B. non-cooperative game. C. cooperative game. • D. negative-sum game.
- In one hour of cooking time, Iron Chef Morimoto can make 120 dumplings or 60 empanadas. Iron Chef Flay can make 90 dumplings or 30 empanadas. Which of the following terms of trade would be acceptable to both Iron Chef Morimoto and Iron Chef Flay? Group of answer choices 4 dumplings for 3 empanadas. 1 dumpling for 1 empanada. 5 dumplings for 2 empanadas. 4 dumplings for 1 empanada.The Able Manufacturing Company and Better Bettors, Inc. are rival firms in the production of a calculator used by horse racing fans for handicapping (determining betting strategies). Each firm has a fixed cost of $100 and a MC = $10 in producing calculators. The demand for the industry’s product is: Q = 900 – 5P, where P is the market price and Q = Q1 + Q2. If each firm must choose how many calculators to produce and sell without knowing of its rival’s production decision, what will be the Cournot equilibrium price and quantities produced? Calculate the profit for each firm.If there is only one buyer and one seller meeting to exchange, then any price that they agree upon must be between the willingness to pay of the buyer and the willingness to sell of the seller.True or False
- Ready Foods contracts to buy two hundred carloads of frozen pizzas from Speedy Distributors. Before Ready or Speedy starts performing, can the parties call off the deal? What if Speedy has already shipped the pizzas? Explain your answers.In bargaining without impatience, explain how the number of bargaining rounds and who makes the first offer affect the final outcome.Two parties, Juan and Ben, have been negotiating the purchase by Ben of Juan's car. Juan receives a new and higher bid for his car from Adriana. How might Adriana's bid change Juan and Ben's threat values? The threat values are unchanged. Juan now values the car at the price of Adriana's bid, her bid is his opportunity cost of selling the car to Ben, and that opportunity cost is Juan's new threat value. Juan's new threat value is the product of the difference between Ben and Adriana's offers and the probability the car will be sold to Adriana. Juan's threat value is unchanged, but Ben has to consider his new opportunity cost