This exam has two parts.Part 1: Choose 2 of possible 3 quest…
Questions
This exаm hаs twо pаrts.Part 1: Chооse 2 of possible 3 questions. Questions are worth 15 points each (30 points total)Part 2: Complete 2 of the possible 3 questions in full (120 points total or 60 points each)Total Points Possible: 150 PART 1(30 points-15 each): Choose 2 of the following 3 questions; Part 1 Option 1:An incumbent has the option of engaging in research and development that will give it an advantage if there is entry of another firm. The payoffs of engaging in R&D or not along with the prospect ofentry are summarized in the extensive form game below. Payoffs are written as (Payoff of Incumbent, Payoff of Entrant) i) What is the subgame perfect Nash Equilibrium?ii) Is there a first mover advantage for the incumbent? What about for the entrant? Hint: consider whether or not the incumbent is better off when it moves first or the entrant. Is the entrant better off when it moves first vs the incumbent Part 1 Option 2: In the airline case study, firms were able to publicly submit proposed price increases on future fares and to change these proposed increases if other firms did not match their prices.i) How can this be considered tacit collusion? Be sure to define tacit collusion and explain why such a practice as this may not necessarily be evidence of a conspiracy to coordinate prices.ii) Part of the government’s ruling in this case was to explicitly forbid the practice of being able to suggest prices, and then to rescind them before consumers see them. Explain why this type of behavior was considered conducive to collusion. Part 1 Option 3: One aspect of markets that are conducive to cartel agreements being more sustainable, is that it is easy to detect cheating. i) Explain why it is easier to detect cheating of a fellow cartel member when demand is stable? ii) Why would punishing for a finite number of periods be superior to punishing forever and a particularly useful strategy when demand is volatile?
Cоnsider the fоllоwing exаmple of inductive reаsoning: The Docking Institute of Public Affаirs at Fort Hays State University conducted their 2019 Kansas Speaks fall survey from August 26 to October 14, 2019. A random sample of 352 adult residents of Kansas age 18 and older were surveyed by telephone (landline and cell phone) to assess their attitudes and opinions regarding various issues of interest to Kansas citizens. This was a 16% response rate, meaning that 2200 calls were attempted. Among the data generated by the survey, 88.1% of the respondents supported "requiring background checks on all gun sales" (73.5% "strongly support," and 14.6% "somewhat support"). They concluded that if all adult Kansas residents were surveyed, it is 95% probable that these findings (88.1% in favor; 73.5 % strongly, 14.6% somewhat) would be found, with a margin of error of plus or minus 5.2%. In other words, they were highly confident that support among Kansans for requiring background checks on all gun sales fell in the range of 82.9% to 93.3%. Given the following modification of the argument, indicate two things: (1) if it strengthens the argument (makes it more likely that the conclusion is true), weakens the argument (makes this less likely), or has no effect, and (2) why you think this is so. A highly publicized mass shooting (22 people dead, 24 injured) took place at a Walmart in El Paso, TX just three weeks prior to the start of the survey.