Micro II: Homework problem III Bartlomiej Wisnicki Deadline: XXXXXXXXXX Each of these exercises is graded separately. Write the solutions with explanations. Unexplained answers will not be graded. You...

I would like to get detailed solutions and explanations so that I could get max points


Micro II: Homework problem III Bartlomiej Wisnicki Deadline: 04.06.2019 Each of these exercises is graded separately. Write the solutions with explanations. Unexplained answers will not be graded. You can bring the solutions to the classes or send them to [email protected]. If you do the latter, name the message: ”Microeconomics II, homework problem III”. The attached file ought to be a one pdf file with signed pages. 1. A monopolist has a cost function of c(y) = y so that its marginal cost is constant at $1 per unit. It faces the following demand curve: D(p) = { 0, if p > 20 100/p, if p ≤ 20 , where p is the price it sets. (a) What is the profit-maximizing choice of output? (b) If the government could set a price ceiling on this monopolist to force it to act as a competitor (to be a part of perfect competition), what price should they set? (c) What output would monopolist produce if forced to behave as a competitor? 2. Will and Dave are playing the following version of popular UK TV show ”Golden Balls”. They have $10 to share or win. They simultaneously need to make a decision whether to ”steal” or ”split” this amount. If they both decide to ”split” then both get $5. If only one of them steals, he gets the whole sum and the other one is left with nothing. However, if both of them steal they split only 10% of the sum, meaning they get $1 each. (a) Write the game in a strategic form. (b) Find the dominated strategies and all Nash Equilibria of this game. (c) Let’s assume that Will and Dave play this game 5 times, each time they split or steal $2. Does the outcome of the game in equilibrium change? Provide short explanation. 1