Two firms are in the chocolate market. Each can choose to go for the high end of the market (high quality) or the low end (low quality).

Resulting profits are given by the following table:

FIRM 1 / FIRM 2 l LOW l HIGH
LOW l -20, -30 l 900,600
HIGH l 100,800 l 50,50

a. Consider the simultaneous game where Firm 1 (the row player) and Firm 2 (the column player) decide on the quality at the same time. Using the Method 1 (the intersection of best responses), find out the Nash equilibria, if any.

b. Draw a game tree representing this simultaneous game given in section a.

c. Next consider a variation of this game. Suppose Firm 1 is the leader, he decides first on the quality. Then, the Firm 2 decides on the quality knowing the decision of Firm1. Draw the game three of this sequential game. Find the Subgame Perfect Nash Equilibrium of this game by backward induction method.

d. Draw a table representing this sequential game given in section c.

Afactory owner wants his workers to produce as many widgets as they can so he pays his workers based on how many widgets they produce. however, in order to make sure that the workers do not rush and produce a large number of poorly made widgets, he checks the widgets at random at various stages of their manufacture. if a defect is found in a widget, the pay of the entire section of the factory responsible for that defect is docked. how is this factory owner seeking to solve the agency conflict problem in this case?

On june 1 of the current year, chad wilson established a business to manage rental property. he completed the following transactions during june: opened a business bank account with a deposit of $28,000 from personal funds. purchased office supplies on account, $2,690. received cash from fees earned for managing rental property, $7,390. paid rent on office and equipment for the month, $3,310. paid creditors on account, $1,230. billed customers for fees earned for managing rental property, $6,130. paid automobile expenses (including rental charges) for the month, $740, and miscellaneous expenses, $370. paid office salaries, $2,330. determined that the cost of supplies on hand was $1,590; therefore, the cost of supplies used was $1,100. withdrew cash for personal use, $2,210. required: 1. indicate the effect of each transaction and the balances after each transaction: for those boxes in which no entry is required, leave the box blank. for those boxes in which you must enter subtractive or negative numbers use a minus sign. (example: -300) answer

Self-interest achieve society’s economic goals because producers know which goods consumers want the most. as consumers and producers exercise their freedom to act in their own self-interest, markets will produce the desired goods at the lowest possible cost. consumers and producers both operate based on society’s economic goals. consumers know which goods can be produced at the lowest cost. there is a wide variety of desired goods and services in a market system because producers determine what to produce. consumers change their minds frequently. there is always a need to produce something new and improved. individual wants are diverse. what is produced is ultimately determined by consumers, because if the goods offered are not what consumers want, consumers will not buy them. producers, because they are driven by profits. producers, because they determine what to produce. consumers, because they participate in marketing surveys.