1. For each of the following industry types, indicate (a) whether p...

1. For each of the following industry types, indicate (a) whether price is set above, below, or equal to marginal cost; (b) whether firms earn positive, negative, or zero profits in long run equilibrium; and (c) whether entry or exit is free or restricted. Price vs. Marginal Cost Profits Entry/Exit Perfect Competition Monopolistic Competition Monopoly 2. Consider the following Prisoner’s Dilemma problem. Row and column commit a crime and are arrested. They are placed in separate rooms and given the choice to either confess to the crime or deny their involvement. Row Column Confess Deny Confess Row: 8 years in jail Column: 8 years in jail Row: 1 year in jail Column: 10 years in jail Deny Row: 10 years in jail Column: 1 year in jail Row: 2 years in jail Column: 2 years in jail A. What is the Nash Equilibrium outcome for this game? 3. Consider the following simultaneous, non-cooperative game, where two competing firms, Column and Row, are trying to decide whether to construct a large store or a small one. Profits to each firm under each outcome are given below. COLUMN Small Large ROW Small Row gets $100 Column gets $100 Row gets $50 Column gets $105 Large Row gets $105 Column gets $50 Row gets $5 Column gets $5 A. Does either player have a dominant strategy? If so, what is it/are they? B. Does this game have any Nash equilibria? How many (there may be more than one)? What is it/are they?