# Eco204 Unit 4 Term Paper

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et powerECO204: Homework Assignment 3 1. True, False, Uncertain a. A firm that enjoys economic rents earns higher economic profits than other firms without the economic rents. b. Relative to the perfectly competitive equilibrium, the equilibrium outcome for a market dominated by a monopsonist will be higher prices and lower levels of good demanded. c. Government intervention in perfectly competitive markets will lead producer surplus to increase at a cost to consumers surplus. d. Government intervention in perfectly competitive markets will make markets more efficient. e. When regulating a natural monopolist, the government will require the firm to charge prices equal to the perfectly competitive firms’ price. f. A Nash Equilibrium implies…show more content…
The number of outcomes left using iterated elimination of strictly dominated strategies is equal to using the outcomes remaining when using the best response method. 2. Suppose one country, named Expandia, has only one goal in mind: total world domination. The country is willing to succeed at any cost, including the purchase and use of nuclear missiles. However, since all other countries have agreed not to use nuclear missiles, Expandia finds itself as the only country with interests in purchasing these weapons of mass destruction. If their demand for the missiles is P = 30,000 – 125Q and the perfectly competitive supply is given by P = 1000 + 75Q, calculate and state the equilibrium number of missiles Expandia will purchase and the price they will pay for each missile. Also, calculate the area of Expandia’s consumer surplus. Note: round your quantity answers to the nearest whole number. 3. For part (a) thru (c), first use Iterated Elimination of Strictly Dominated Strategies to find remaining strategies. Then use the BR method to find all NE. a. Red P1 Orange Green Purple Red P1 Orange Green Purple 7, 2 3, 1 9, 18 P2 L P1 A B C D 3, 0 9, 6 11, 1 7, 13 M 12, 8 3, 12 0, 3 1, 4 N 5, 2 8, 16 10, 0 3, 13 O 6, 6 13, 11 9, 12 10, 8 7, 2 3, 1 9, 18 P2 Yellow 8, 5 6, 3 7, 14 P2 Yellow 8, 5 6, 3 7,