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Author Question: If each player has a dominant strategy, then those strategies make up the Nash equilibrium. What ... (Read 126 times)

leilurhhh

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on: Jul 1, 2018
If each player has a dominant strategy, then those strategies make up the Nash equilibrium.
 
  What will be an ideal response?

Question 2

A firm experiences increasing returns to scale; that is, doubling all its inputs more than doubles its output. What can be inferred about the firm's short-run costs?
 
  What will be an ideal response?


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vseab

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Reply #1 on: Jul 1, 2018
Answer to Question 1

True. A Nash equilibrium is where each player is selecting their best response to the other player's strategy. Because a dominant strategy is a best response to any strategy of the other player, it must also be a best response to the specific strategy of the other player.

Answer to Question 2

Returns to scale is a long-run phenomenon because all inputs must be changed. Thus we can infer little about the firm's short-run costs from this information, other than the firm is likely to experience diminishing marginal returns in the short run due to the fact that it will have a fixed factor of production (and thus short-run marginal costs will rise with output).


leilurhhh

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Reply 2 on: Jul 1, 2018
YES! Correct, THANKS for helping me on my review

Dinolord

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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