Economics Homework Problem Set

The following sample Economics paper is 222 words long, in MLA format, and written at the undergraduate level. It has been downloaded 460 times and is available for you to use, free of charge.

Problem Set

1. a. TR=P x Q_1=(1,200-Q_1) x Q_1=1,200Q_1 x Q_1^2=MR. MR=〖MC〗_1

1,200Q_1 x Q_1^2=2, 1,200 x Q_1=2Q_1, Q_1=600(Q_1/2)=P_1, P_1=600(Q_1/2)

b. TR=P x (Q_1+Q_2)=(1,200 – (Q_1+Q_1)) x Q_2=1,200Q_2 - Q_1 Q_2- Q_2^2. The derivative is 1,200 - 2Q_1 -Q_2=〖MR〗_2=〖MC〗_2

4=1,200 - 2Q_1 -Q_2, Q_2 + 4=1,200 - 2Q_1, because Q_1=600(Q_1/2), Q_2 + 4=1,200 – 2(600(Q_1/2)), Q_2 + 4=1,200-1,200Q_1, Q_2=1,196-1,200Q_1=P_2

c. Because Q_2=1,196-1,200Q_1, then TR=1,200Q_2-Q_2,because MR=MC,then 1,200(4)-4=P_2=4,796

2. a. This game has 0 equilibria in pure strategies; (C, A) and (B, D); (A, C) and (D, B).

b. This game has 2 equilibria in pure strategies; (A, A) and (B, B); (A, B) and (B, A).

3. a. Noncooperative Game: A game theory where players make decisions independently and do not cooperate.

b. Dominant Strategy: One strategy is better than another for one player no matter how the other opponents play.

c. Pure Strategy: A strategy where a player follows one specific move or action in every possible chance of the game.

d. Mixed Strategy: A strategy where a player uses different possible moves and a probability distribution that corresponds to how often each move is made.

4. a. The Bertrand Model; P_1= P_2=MC

b. There are no calculations to be made here as both firms have 0 MC, which therefore means that P_1 and P_2=0 and Q_1 and Q_2=0