EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 16, Problem 16.4P
a
To determine
Whether Coase theorem is applied to predators and companies. Whether equipment available have efficient operating characteristics or not.
b)
To determine
Specifications and guidelines for usage of equipment.
c)
To determine
The effect on transaction between predators and companies due to high carelessness of user.
d)
To determine
The effect on transaction between predators and companies if
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Jacob wants to rent out car from James. Jacob has a big passion for cars and enjoys speeding, so much that he often gets fined. Jacob receives £400 in utility from being able to speed on the road whereas James would like to avoid getting fined. If Jacob spreads don the road, it will cost James £700. Thus, James is considering charging Jacob a fine deposit of £700.
a) Draw the extensive form of this principal-agent problem and use backward induction to solve for the Nash Equilibrium.
b) Explain why this situation could be considered a principal-agent problem
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
Splitting Pizza: You and a friend are in an Italian restaurant, and the owner offers both of you a free eight-slice pizza under the following condition. Each of you must simultaneously announce how many slices you would like; that is, each player i ∈ 1, 2 names his desired amount of pizza, 0 ≤ si ≤ 8. If s1 + s2 ≤ 8 then the players get their demands (and the owner eats any leftover slices). If s1 + s2 > 8, then the players get nothing. Assume that you each care only about how much pizza you individually consume, and the more the better.What outcomes can be supported as pure-strategy Nash equilibria?
Chapter 16 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 16.2 - Prob. 1TTACh. 16.2 - Prob. 2TTACh. 16.2 - Prob. 1MQCh. 16.3 - Prob. 1MQCh. 16.3 - Prob. 2MQCh. 16.3 - Prob. 1TTACh. 16.3 - Prob. 2TTACh. 16.4 - Prob. 1MQCh. 16.4 - Prob. 2MQCh. 16.7 - Prob. 1MQ
Ch. 16.7 - Prob. 2MQCh. 16.8 - Prob. 1TTACh. 16.8 - Prob. 2TTACh. 16.8 - Prob. 1.1TTACh. 16.8 - Prob. 2.1TTACh. 16 - Prob. 1RQCh. 16 - Prob. 2RQCh. 16 - Prob. 3RQCh. 16 - Prob. 4RQCh. 16 - Prob. 5RQCh. 16 - Prob. 6RQCh. 16 - Prob. 7RQCh. 16 - Prob. 8RQCh. 16 - Prob. 9RQCh. 16 - Prob. 10RQCh. 16 - Prob. 16.1PCh. 16 - Prob. 16.2PCh. 16 - Prob. 16.3PCh. 16 - Prob. 16.4PCh. 16 - Prob. 16.5PCh. 16 - Prob. 16.6PCh. 16 - Prob. 16.7PCh. 16 - Prob. 16.8PCh. 16 - Prob. 16.9PCh. 16 - Prob. 16.10P
Knowledge Booster
Similar questions
- Two travelers own an identical suitcase that contains identical antiques. The airline is liable for a maximum of $100 per suitcase. To determine how much to reimburse each traveler, the airline puts them in different rooms (so that they cannot communicate), and ask them to write down an amount (an integer number) between $2 and $100. If both write down the same number, the airline will reimburse both travelers that amount. However, if the two amounts are different, both travelers will be paid the lowest of the two numbers along with a bonus/malus: $2 extra will be paid to the traveler who wrote down the lower value and a $2 deduction will be taken from the person who wrote down the higher amount. What are the travelers’ best response functions? What are the Nash equilbria of the game? Are they Pareto efficient? Explain the intuition why.arrow_forwardConsider the case of global environmental problems that spill across international borders as a prisoner’s dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries, A and B. Each country can choose whether to protect the environment, at a cost of 10, or not to protect it, at a cost of zero. If one country decides to protect the environment, there is a benefit of 16, but the benefit is divided equally between the two countries. If both countries decide to protect the environment, there is a benefit of 32, which is divided equally between the two countries. a. In Table, fill in the costs, benefits, and total payoffs to the countries of the following decisions. Explain why, without some international agreement, they are likely to end up with neither country acting to protect the environment.arrow_forwardHello, please help me to solve part (d) and (e):Charlie finds two fifty-pence pieces on the floor. His friend Dylan is standing next to him when he finds them. Chris can offer Dylan nothing at all, one of the fifty-pence pieces, or both. Dylan observes the offer made by Charlie, and can either accept the offer (in which case they each receive the split specified by Charlie) or reject the offer.If he rejects the offer, each player gets nothing at all (because Charlie is embarassed and throws the moneyaway).(a) Formulate this interaction as an extensive-form game. To keep things simple, players’ payoff is equal to their monetary gain.(b) List all histories of the game. Split these into terminal and non-terminal histories.(c) What are the strategies available to Charlie? What are the strategies available to Dylan? Draw the strategic-form game.(d) Find the pure-strategy Nash equilibria of this game.(e) What do you think will happen?arrow_forward
- Suppose an emissions standard is implemented that required each plant to reduce its pollution by 5,000 tons. What will be the Total Cost of Pollution Reduction for the entire industry? Suppose instead of an emissions standard, the government implements a tradeable permit system. Each firm is now given 3,000 permit each (1 permit equals 1 ton of pollution allowed). How many permits will be traded between the 2 firms? (Hint: The total amount that need to be reduced is 10,000 tons. i.e. Q1 + Q2 = 10,000)arrow_forwardIt is the week before the Yule Ball Dance, and Victor and Ron are each contemplating whether to ask Hermione. As portrayed above, Victor moves first by deciding whether or not to approach Hermione. (Keep in mind that asking a girl to a dance is more frightening than a rogue bludger). If he gets up the gumption to invite her, then Hermione decides whether or not to accept the invitation and go with Victor. After Victor (and possibly Hermione) have acted, Ron decides whether to conquer his case of nerves (perhaps Harry can trick him by making him think he’s drunk Felix Felicis) and finally tell Hermione how he feels about her (and also invite her to the dance). However, note that his information set is such that he doesn’t know what has happened between Victor and Hermione. Ron doesn’t know whether Victor asked Hermione and, if Victor did, whether Hermione accepted. If Ron does invite Hermione and she is not going with Victor— either because Victor didn’t ask, or he did and she…arrow_forward12.3 Armed Conflict: Consider the following strategic situation: Two rival armies plan to seize a disputed territory. Each army's general can choose either to attack (A) or to not attack (N). In addition, each army is either strong (S) or weak (W) with equal probability, and the realizations for each army are independent. Furthermore the type of each army is known only to that army's general. An army can capture the territory if either (i) it attacks and its rival does not or (ii) it and its rival attack, but it is strong and the rival is weak. If both attack and are of equal strength then neither captures the territory. As for payoffs, the territory is worth m if captured and each army has a cost of fighting equal to s if it is strong and w if it is weak, where s <w. If an army attacks but its rival does not, no costs are borne by either side. Identify all 12.7 Exercises • 267 the pure-strategy Bayesian Nash equilibria of this game for the following two cases, and briefly describe…arrow_forward
- 5) Suppose that the letter grade earned on a test for each student in a class depends upon how well he/she does relative to other students in the class. This exhibit shows a prisoner’s dilemma setting for two representative students in the class, George and Gina. What is the expected final Nash Equilibrium? a) Study 4 hours for both Gina and George. b) Study 2 hours for both Gina and George. c) George studies for 2 hours, and Gina studies for 4 hours. d) George studies for 4 hours, and Gina studies for 2 hours.arrow_forwardMary and Raj are the only two growers who provide organically grown corn to a local grocery store. Table below represents the choices available to Mary and Raj and the payoffs associated with each outcome. What is the best choice for Raj if he is sure that Mary will cooperate? If Mary thinks Raj will cheat, what should Mary do and why? What is the prisoner’s dilemma result? (A = Work independently; B = Cooperate and Raise prices. Each results entry lists Raj earnings first, and Mary's earnings second.) Mary A B Raj A ($100, $100) ($200, $0) B ($0, $200) ($150, $150)arrow_forwardWhy is information asymmetry not a problem if both parties to an agreementwant the same thing?arrow_forward
- Four neighbors, each with a vegetable garden, agree to share their produce. One will grow beans (B), one will grow lettuce (L), one will grow tomatoes (T), and one will grow zucchini (Z). Table shows what fraction of each crop each neighbor will receive. What prices should the neighbors charge for their crops if each person is to break even and the lowest-priced crop has a value of $50?arrow_forwardConsider a modified Traveler’s Dilemma. In terms of strategy options that the players have and the dollars they earn, it is like the standard Traveler’s Dilemma, but the players do not have endless appetite for money. Up to 100 dollars, each dollar feels like a dollar. But any moneybeyond 100 is psychologically like 100 dollars. Assuming that players are maximizers of ‘psychological’ dollars instead of real dollars, describe all the Nash equilibria of this modified Traveler’s Dilemma.arrow_forwardUNIT 9 CHAPTER 5 In a gambling game, Player A and Player B both have a $1 and a $5 bill. Each player selects one of the bills without the other player knowing the bill selected. Simultaneously they both reveal the bills selected. If the bills do not match, Player A wins Player B's bill. If the bills match, Player B wins Player A's bill. Develop the game theory table for this game. The values should be expressed as the gains (or losses) for Player A. Is there a pure strategy? Why or why not? Determine the optimal strategies and the value of this game. Does the game favor one player over the other? Suppose Player B decides to deviate from the optimal strategy and begins playing each bill 50% of the time. What should Player A do to improve Player A’s winnings? Comment on why it is important to follow an optimal game theory strategy.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning