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Author Question: The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price ... (Read 1250 times)

Yolanda

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Reply #30 on: Jun 18, 2019


The above figure shows the payoff matrix for two firms. A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the nearby lake. A private beach on the lake must decide whether to operate or not. Increased pollution reduces the number of people who wish to visit the beach. Joint profits are maximized when
◦ the beach shuts down and the chemical firm produces 1 ton of pollution.
◦ the beach shuts down and the chemical firm produces 2 tons of pollution.
◦ the beach operates and the chemical firm produces 1 ton of pollution.
◦ the beach operates and the chemical firm produces 2 tons of pollution.
Microeconomics ¦ Perloff ¦ 8th Edition
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poopface

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Reply #31 on: Jun 18, 2019
the beach operates and the chemical firm produces 1 ton of pollution.


craiczarry

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Reply #32 on: Jun 18, 2019


The above figure shows the payoff matrix for two firms. A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the nearby lake. A private beach on the lake must decide whether to operate or not. Increased pollution reduces the number of people who wish to visit the beach. If nobody owns the lake, then
◦ joint profits are maximized.
◦ joint profits are zero.
◦ the beach will not operate because of too much pollution.
◦ joint profits are not maximized.


lou

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Reply #33 on: Jun 18, 2019
joint profits are not maximized.


craiczarry

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Reply #34 on: Jun 18, 2019
TY


lou

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Reply #35 on: Jun 18, 2019
You're welcome


rayancarla1

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Reply #36 on: Jun 18, 2019


The above figure shows the payoff matrix for two firms. A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the nearby lake. A private beach on the lake must decide whether to operate or not. Increased pollution reduces the number of people who wish to visit the beach. Determine the Nash equilibrium without property rights.


kescobar@64

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Reply #37 on: Jun 18, 2019
Without property rights, operating is a dominant strategy for the beach owner and 2 tons of pollution is a dominant strategy for the chemical firm.


rayancarla1

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Reply #38 on: Jun 18, 2019
Thank you!


kescobar@64

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Reply #39 on: Jun 18, 2019
Always glad to help...


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