Punish beta with a retaliatory price cut

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Reference no: EM138715

Q1. Suppose that businesses buy a total of $170 billion of the four resources (labor, land, capital, and entrepreneurial ability) from households. If households receive $88 billion in wages, $24 billion in rent, and $34 billion in interest. Explain how much households were paid for providing entrepreneurial ability?

Q2. a) Is the pricing decision facing Alpha and Beta a prisoners' dilemma? Why or why not?
b) Explain the cooperative outcome? Illustrate the non-cooperative outcome?
c) If Alpha and Beta make their pricing decision just one time, will they choose outcome of the cooperative? Explain why or why not?
d) Can Alpha make a credible threat to punish Beta with a retaliatory price cut? Can Beta make a credible threat of a retaliatory price cut?
e) Clarify whether Beta would be more or less likely to

Reference no: EM138715

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