Why do firms fail to reach their optimal outcomes

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Microeconomic Assignment

1. Explain what WTA, WTP are. How are these concepts related to a market for an output good/service and the allocation of the good/service?

2. Often, in marketing one is trying to convince consumers of a product's ‘value.' Using the indifference curve and budget constraint concepts, explain how this ‘value' would be represented in terms of trade-offs, maximizing customer satisfaction, and how this might generate additional sales for a retailer.

3. Under what circumstances might game theory replace a standard profit maximization function? How does a firm's strategic behavior differ between repeated play games and single play games?

4. Why do firms fail to reach their optimal outcomes in the Prisoner's Dilemma? Under what set of circumstances could they reach these optimal outcomes in this strategic game?

Reference no: EM131481220

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