ECON QUSTION

Answer the following prompts by clicking on the "reply" button below. Your post will be added to a discussion thread.  Answers are due by 11:59pm on Wednesday, July 1.

Budgets and Profits
	Tech B
	High Budget	Low Budget
Tech A	High Budget	$18m.  ,    $14m	$24m.  ,    $10m
	Low Budget	$14m.  ,    $22m	$25m.  ,    $18m

1. Consider two software tech firms, Tech A and Tech B. Each firm must decide on the size of their research and development budget: high budget or low budget. The payoff matrix displays the possible choices and profits

a. Does Tech A have a dominant strategy? If yes, what is their dominant strategy?

b. Does Tech B have a dominant strategy? If yes, what is their dominant strategy?

c. What is the Nash equilibrium?

 

2.  How might advertising and brand names reduce economic well-being? How might advertising and brand names increase economic well-being?

3.  Define and give an example of a common resource (something other than fish in the ocean). Without government intervention, will people use this good too much or too little? Why?