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(Solution document) Question: Hi, can you explain more in dept for these questions as I don't understand. Question 1 Consider the following game with two players A and B....


Question:Hi, can you explain more in dept for these questions as I don't understand. The question is attached below.


Question 1


Consider the following game with two players A and B. Player A has three actions: Top, middle and bottom. Player B has two actions left and right. The payoffs are shown in the following payoff matrix:

 

 Player B

Left Right

                                                                              

            Player A Top (1,2) (2,3)

Middle (0,1) (1,4)

Bottom (3,0) (1,2)

          

                   

 

A)   Does either player have a dominant strategy? Explain.

 

 

 

B)   Find all the Nash Equilibria to the game.



Question 2


Use an economic model to explain whether the following statement is true or false.

 

"A market with a positive production externality has a deadweight loss created by too much production relative to the social optimal production."

 







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