Firm A and firm B are the only producers of Mac and Cheese i…
Firm A and firm B are the only producers of Mac and Cheese instant packages in the market. They know that if they cooperate and produce less Mac and Cheese packages, they could raise the price of the package. If they do not cooperate and work independently, they will each earn $100,000. If they decide to cooperate and both lower their output, they can each earn $150,000. If one firm lowers the output but the other does not, the firm that lowered the output will get $0 and the firm that did not will get $200,000, as it will capture the entire market. The table below shows the choices and correspondent outcomes: Prisoner’s Dilemma for Oligopoly Firm A Not Cooperate (NC) Cooperate (C) Firm B NC ($100k, $100k) ($200k, $0) C ($0, $200k) ($150k, $150k) If B knows for sure that A will cooperate, B should [option1], if A knows for sure that B will cooperate, A should [option2], hence based on the previous answers, the dominant strategy is [option3].
Read DetailsAna currently works for a law firm and she makes an annual s…
Ana currently works for a law firm and she makes an annual salary of $125,000. She wants to open her own legal practice and expects to earn $200,000 per year. In order to do so, she’ll need to hire a clerk who will cost $35,000/year in salary. She also needs to rent an office, which will cost $50,000/ year. Based on this information, answer the following: Calculate Ana’s accounting profit (show your work!). Calculate Ana’s economic profit or loss (show your worl!)
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