QUESTION 4. Consider the following game. Player 1’s payoffs are listed first, in bold: Player 2 X Y Player 1 U 100 , 6 800 , 4 M 0 , 0 200 , 1 D 10 , 20 20 , 20 a. Imagine that Player 1 makes a decision first and Player 2 makes a decision after observing Player 1’s choice. Write down every subgame-perfect Nash equilibrium of this game. b. Does the outcome above differ from the Nash equilibrium (if the game were played simultaneously)? Carefully explain why, intuitively, the result differs or does not differ.

attached below is remaining part of the detailed solution

A) SPNE = ( M,Y )

B) PSNE = ( U,Y )

Explanation:

A) write down every subgame-perfect Nash equilibrium of the game

attached below

The second player can observe the first player's choice before making his own choice and the first player will always play M knowing that the second player will observe him, also the second player will play Y

Therefor the SPNE of the game will be : ( M,Y )

B) If the game were played simultaneously the results will be different and this is because the second player doesn't have the information of what the first player played

Therefore the PSNE of the game will be : ( U,Y )

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know