Macroeconomics is the field of economics that studies the behaviour of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels.

Macroeconomics and microeconomics are two most general fields in economics. Macroeconomics is the branch of homework help dealing with the structure, performance, behaviour and decision making of an economy as a whole, rather than individual markets.

There is a huge difference between macroeconomics and microeconomics. Microeconomics Homework and microeconomics assignment is basically focused on the actions of individual agents, such as firms and consumers and how their behaviour determines prices and quantities in specific markets. Whereas macroeconomists study aggregated indicators such as GDP, unemployment rates and price indices to understand how the whole economy functions. Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance.

Macroeconomic models and their forecasts are used by governments to assist in the development and evaluation of economic policy. The two most important fields of research of macroeconomics are: the attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle) and the attempt to understand the determinants of long-run economic growth (increases in national income). Contact urgenthomework.com for macroeconomics homework help.

*Please utilize well-executed, clearly constructed graphs and/or tables/matrices where requested. Please remember to:*

*Clearly label your matrices, including indicating the players and labeling the outcomes for each player. Use color where appropriate.*

**Question 1 (25 points)**

For this question, assume the online retailing market is dominated by two firms. Let’s name them Firms **AAA** and **ZZZ**.

These firms sell a similar line of products and have very similar prices. However, one key strategic tool for each of them is advertising. Assume the two firms each have just two possible advertising strategies: spend a great deal of money on their advertising (**High**) or spend a modest amount on advertising (**Low**).

- If they both choose to have modest (
**Low**) advertising budgets, they each have profits of**$900**(equal split of the**$1800**maximum monopoly profit). - If they both have
**High**advertising budgets, they incur greater costs. So the two companies earn just**$675**each in profits. - However, if
**AAA**has a**Low**advertising campaign and**ZZZ**has a**High**advertising budget**, AAA**has profits of**$810**while**ZZZ**has profits of**$940**. - If
**ZZZ**has a**Low**advertising budget while**AAA**has a**High**advertising budget,**ZZZ**has profits of**$565**while**AAA**has profits of**$1,000**.

__For parts (a)-(e) you should assume this is a single-play, non-repeated game__.

- Construct a payoff matrix to describe this simple non-cooperative game. Fill the cells with the correct payoffs.
*(5 points)*

- Is there a
**dominant strategy**equilibrium?*Explain*.*(5 points)*

- What is/are the
**Nash equilibrium/equilibria**(if any)?*(5 points)*

- If
**ZZZ**could credibly threaten to run a**High**advertising budget, what is the maximum it would be willing to pay**AAA**in order to buy them out of the market (in which case**ZZZ**will remain the monopolist and collect monopoly profits)? What is the**minimum**that**AAA**would be willing to accept to be bought out in this situation?*Please recall that this is a single-play, non-repeated game.**(5 points)*

- Assuming no further entry into the online retailing market is possible by anyone, including
**AAA**, would such a purchase be a smart decision for**ZZZ**?*(5 points)*

**Question 2 (25 points)**

You and a good friend are supposed to meet in Paris, France. You know you have arranged to meet at either the Arc de Triomphe (AdT) or at the base of the Eiffel Tower (ET) but you cannot remember which and you cannot communicate with each other.

You prefer the Arc de Triomphe. Your friend prefers the Eiffel Tower. But you both much prefer to be together rather than apart.

- If you and your friend each arrive at the Eiffel Tower, your friend’s payoff is
**5**but your payoff is**3**. - If you and your friend each arrive at the Arc de Triomphe, your payoff is
**5**and your friend’s payoff is**3**. - If you go to the Arc de Triomphe and your friend goes to the Eiffel Tower, your payoff is
**2**and your friend’s payoff is**2**. - If you go to the Eiffel Tower and your friend goes to the Arc de Triomphe, your payoff is
**1**and your friend’s payoff is**1**.

If it helps, you can think of these payoffs as units of enjoyment or utility you and your friend derive from the outcomes. (As you recall, while firms maximize profits, individuals maximize utility). Assume that this is a single-play, non-repeated game.

- Construct a payoff matrix with two choices for each player:
**ET**(for Eiffel Tower strategy) and**AdT**(for Arc de Triomphe) strategy. Fill the cells with the correct payoffs. (*6 points)*

- Do you have a dominant strategy? (
*6 points*)

- Does your friend have a dominant strategy? (
*6 points*)

- Of the 4 possible outcomes, identify which one(s), if any, satisfy the conditions of a Nash Equilibrium.
*Explain your logic.*(*7 points*)

- Macroeconomics Questions
- Behavioral Economics
- Cost of Production
- Derivatives Market
- Economic Growth
- Economic Systems
- Efficiency
- Game theory
- Inflation
- International Economics
- Macroeconomics
- Market failure
- Marxism
- Microeconomics
- Monopoly
- Normative Economics
- Price Elasticity of Demand
- Revenue
- Supply and demand
- Welfare Economics
- Scarcity
- Specialization
- Classical theory
- Depression and unemployment
- Development Economics
- Economic thought
- Managerial Economics
- Public Economics

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