Consider a small town that has a population of dedicated piz…

Consider a small town that has a population of dedicated pizza eaters but is able to accommodate only two pizza shops, Donna’s Deep Dish and Pierce’s Pizza Pies. Each seller has to choose a price for its pizza, but for simplicity, assume that only two prices are available: high and low. If a high price is set, the sellers can achieve a profit margin of $12 per pie; the low price yields a profit margin of $10 per pie. Pierce’s has a loyal captive customer base that will buy 4,000 pies per week, no matter what price is charged by the store. There is also a floating demand of 5,000 pies per week. The people who buy these pies are price conscious and will go to the store with the lower price; if both Donna’s and Pierce’s charge the same price, this demand will be split equally between them. Donna’s loyal captive customer base has to be larger than ________ so that it sets its price at $12/pie if Pierce’s sets its price at $10/pie.

Consider a two-player game between Raising Cane’s and Layne’…

Consider a two-player game between Raising Cane’s and Layne’s Chicken Fingers, each of which sells chicken basket combos (a uniform good). Each firm can set either a high or a low price. If they both set a high price, each receives profits of $64,000 per year. If one sets a low price and the other sets a high price, the low-price firm earns profits of $72,000 per year, while the high-price firm earns $20,000. If they both set a low price, each receives profits of $57,000. Suppose the two firms play this game repeatedly forever. Let each of them use a grim-trigger strategy in which they both price high unless one of them “defects,” in which case they price low for the rest of the game. Suppose now that the firms know that there is a 90% probability that the game goes on after any given year. Under these circumstances, a firm has incentives to defect for all r greater than _______ (please enter an exact answer).

Consider the following binary route choice game with 12 play…

Consider the following binary route choice game with 12 players. Each player simultaneously decides whether to take the main road or the side road. Let x define the number of commuters that take the main road. The payoff for taking the main road is UM=10+2(8-x) and the payoff for taking the side road is US=10+3[6-(12-x)]. The socially optimal outcome requires that there are _________ drivers in the main road.