DB#1 A manufacturer of microwaves has discovered that male shoppers have little value for microwaves and attribute almost no extra value to an auto-defrost feature. Female shoppers generally value microwaves more than men and attribute greater value to the auto-defrost feature. There is a little additional cost to incorporating an auto-defrost feature. Since men and women cannot be charged different prices for the same product, the manufacturer is considering introducing two different models. The manufacturer has determined that men value a simple microwave at $75 and one with auto-defrost at $90 while women value a simple microwave at $90 and one with auto defrost at $150.
A. If there is an equal number of men and women, what pricing strategy will yield the greatest revenue?
B. What if most of the microwave shoppers are women?
DQ #2 – A. Two best friends, each of whom belongs to opposing political coalitions, typically vote oppositely in local elections and so their votes “cancel each other out.” They each gain two units of utility from a vote for their positions (and lose two units of utility from a vote against their positions). However, the bother of actually voting costs each one unit of utility. Diagram a game in which they choose whether to vote or not to vote.
B. Suppose the two best friends from opposing political coalitions have a common interest to vote for a public policy on banning vaping in all public places and imposing higher sales taxes for all vaping products in an attempt to decrease addiction to nicotine in teenagers and young adults. The two friends agreed not to vote in tomorrow’s election to allow vaping in public places. Would such an agreement improve utility? Would such an agreement be an equilibrium?
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