Fedor Volkov

1)

Economics Test 2

A. False
B. True
C. True

2) A
3)The company is going to produce 3 balls, sell them at a price of 7 Wiknamian Dollars
and make a profit of 4 Wiknamian Dollars per ball => 12 Wiknamian $ of total profit.

4)

1. Granting free access to museums to school aged children based on their

ability to provide ID confirming their age.

2. Providing x% discount at grocery stores to WW 2 veterans based their ability to
provide certification of being such.
5) C
6) If we assume that both Sue and Joe are rational economic actors, and their sole goal
is to maximize their profits, then due to the colluded nature of the venture they would
both choose to be open for short hours and maximize both their personal revenue and
the revenue of the system. This would reflect them reaching a Pareto optimal state.
Neither party is likely to attempt to cheat one another, as while they would gain short
term benefit (one time $20,000 gain over the competitor), they will lose much more
revenue in the long run ($10,000 of potential revenue per game cycle), due to the loss

of trust, and the collapse of the system into a Nash equilibrium state, where both
parties are operating to at a non-revenue maximizing manner due to each others choice
of strategy which leads to inevitable loss of revenue by both parties.