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Eco312 PS1
Eco312 PS1
Question A
If soybeans are one of the ingredients in cattle feed, how does a price support program in soybean
market (i.e., raising the price of soybeans) affect the equilibrium price and quantity of beef?
Question E: Chicken
The classic toy game called Chicken derives from the James Dean movie Rebel without a Cause, in
which two teenage boys drive cars toward a cliff edge to see who chickens out first. The same game
is played by middle-aged drivers who approach each other in streets too narrow for them to pass
without someone slowing down. If both of them speed up, each gets a utility of -1. If both of them
slow down, each gets a utility of 2. If one speeds up and the other slows down, the former gets a
utility of 3 and the latter 0. Show the payoff matrix and find the Nash equilibria of this game.