Dr fine and dr feelgood are the only two medical doctors

Assignment Help Microeconomics

Reference no: EM13372125

Dr. Fine and Dr. Feelgood are the only two medical doctors offering immediate walk-in medical services in the town of Springfield. That is, they operate in a duopoly. Each doctor can charge either a high price or a low price for a standard medical visit. The accompanying matrix shows their payoffs, in profits per patient (in dollars), for any choice that the two doctors can make.

Suppose the two doctors play a one-shot game-that is, they interact only once and never again. What will be the Nash (non-cooperative) equilibrium in this one-shot game?

Now suppose the two doctors play this game twice. Also, suppose each doctor can play one of two strategies: it can play either "always charge the low price" or "tit for tat"- that is, it starts off charging the high price in the first period, and then in the second period it does whatever the other doctor did in the previous period. Write down the payoffs to Dr. Fine from the following four possibilities:

Dr. Fine plays "always charge the low price" when Dr. Feelgood also plays "always charge the low price."

FIRST Period		Payoffs	SECOND Period		Payoffs	TOTAL Payoffs
	Charges (high or low)	Payoffs		Charges (high or low)	Payoffs	TOTAL Payoffs
Fine			Fine
Feelgood			Feelgood

Dr. Fine plays "always charge the low price" when Dr. Feelgood plays "tit for tat."

FIRST Period		Payoffs	SECOND Period		Payoffs	TOTAL Payoffs
	Charges (high or low)	Payoffs		Charges (high or low)	Payoffs	TOTAL Payoffs
Fine			Fine
Feelgood			Feelgood

Dr. Fine plays "tit for tat" when Dr. Feelgood plays "always charge the low price."

FIRST Period		Payoffs	SECOND Period		Payoffs	TOTAL Payoffs
	Charges (high or low)	Payoffs		Charges (high or low)	Payoffs	TOTAL Payoffs
Fine			Fine
Feelgood			Feelgood

Dr. Fine plays "tit for tat" when Dr. Feelgood also plays "tit for tat."

FIRST Period		Payoffs	SECOND Period		Payoffs	TOTAL Payoffs
	Charges (high or low)	Payoffs		Charges (high or low)	Payoffs	TOTAL Payoffs
Fine			Fine
Feelgood			Feelgood

"In the long run, there is no difference between monopolistic competition and perfect competition."

Discuss whether this statement is true, false or ambiguous with respect to each of the criteria listed under a, b, c, and d. Justify your answers.

a. The price charged to consumers

b. The average total cost of production

c. The efficiency of the market outcome

d. The typical firm's profit in the long run

Reference no: EM13372125

Questions Cloud

Low income housing or subsidized housing in urban : low income housing or subsidized housing in urban economics.the paper must be atleastten pages longmake sure that you

Students are required to write an essay on a significant : students are required to write an essay on a significant recent economic event or activity.discuss an economic activity

Macropoland a country that is a natural gas and oil : macropoland a country that is a natural gas and oil importer has a natural rate of unemployment at the full employment

The pizza company is considering entering the marketplace : the pizza company is considering entering the marketplace in your community. use the information from the pizza company

Dr fine and dr feelgood are the only two medical doctors : dr. fine and dr. feelgood are the only two medical doctors offering immediate walk-in medical services in the town of

Using the is - mr - pc model starting from medium run : using the is - mr - pc model starting from medium run equilibrium explain the response of the economy to a deflationary

Transverse waves with a speed of 590 ms are to be produced : transverse waves with a speed of 59.0 ms are to be produced on a stretched string. a 4.95-m length of string with a

Assume you have been hired as a managing consultant by a : assume you have been hired as a managing consultant by a company to offer some advice that will help it make a decision

Affects of investment of ldc-pick one country that has done : affects of investment of ldc-pick one country that has done well with investmentall good point-pick one country that

User Account

All Pages