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For this question, please use dec_data_final.csv  and downlo…

For this question, please use dec_data_final.csv  and download it by right click and save as.    Please construct a training data set and a testing data set by using 80% and 20% of the master data, respectively. To ensure the replicability of the exercise, please set the random seed to 1.  What is the number of observations assigned to the training data?  

Two gas stations next to each other set prices simultaneousl…

Two gas stations next to each other set prices simultaneously. They both compete in price non-cooperatively (i.e., no tacit collusion). Both stations have a marginal cost of $2 per gallon of gas. The gasoline in this market is a homogeneous good. No travel costs exist for the consumers, so all consumers in the market will buy from whichever gas station sets the lowest price. If the gas stations set the same price, the gas stations divide the number of customers evenly among them. This game is played once and then the world ends. We denote the price of gasoline per gallon station A and B charges as p_A and p_B, respectively. The demand for retail gasoline is given by Q = 100 – P, where P is the lowest price among two stations (i.e., P = min(p_A, p_B)).  Given the product is homogeneous, what would be the Bertrand equilibrium price in this market?

Consider that retailers A and B compete in price. Let’s assu…

Consider that retailers A and B compete in price. Let’s assume that the payoffs in each year for retailer A and retailer B are given in the matrix table above. Suppose both retailers have an implicit agreement to play high (i.e., price high) in year 0. Let’s assume both retailers adopt the “grim” strategy. For instance, if retailer A plays low (i.e., price low) in year 1, retailer B plays low forever from year 2 on and never come back to “price high.” On the other hand, retailer B plays high forever as long as retailer A plays high. Let’s assume that both retailers have the same annual discount rate, which is denoted as δ (delta). We assume 1 > δ > 0. Now suppose this δ (delta) increased by 10% for both firms due to an exogenous shock. Which of the following statements is a reasonable prediction given this change in delta?

Refer to the following figure. The price of capital is $50 u…

Refer to the following figure. The price of capital is $50 unit. Suppose that the firm is producing 800 units at the lowest possible cost. Suppose that the firm hires one more worker and discharges 0.4 units of capital, what happens to the firms cost and output produced?