Question

please show work

Question 5 (4) Fill in any numbers as missing payoffs such that the game below is a game of Chicken Player 2 LEFT RIGHT Player 1 UP 10,10 DOWN 0,0 Question 6 (6) Assume a firm has a monopoly on its industry. For each of the outcome measures listed below, rank from Highest to Lowest: Uniform Pricing, 1t degree (perfect) price discrimination, 3rd degree price discrimination. [You may call them "Uniform price," "1"t degree," and "3d degree"] Quantity Sold Consumer Surplus Producer Surplus Highest: 2nd Highest Lowest

Answer 1

	Player 2: Left	Player 2: Right
Player 1: Up	9, 11	10, 10
Player 1: Down	0, 0	11, 9

A game of Chicken shows that when one player swerves and the other player is brave enough then other player wins because of his bravery. And, the Nash Equilibrium in a game of chicken are the cells with different payoffs of both players.

When player 1 choose Up, Player 2's best response is Left (11).
When player 1 choose Down, Player 2's best response is Right (9).
When player 2 choose Left, Player 1's best response is Up (9).
When player 2 choose Right, Player 1's best response is Down (11).

So, there are two Nash equilibrium as best responses of both players occur simultaneously in these two sets. They are:
(Up, Left), and (Down, Right). Or, (9, 11) and (11, 9). So, this is a game of Chicken.

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