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ECON 213PROBLEM SET 4Name: ______________________________________________Problem Set 4 is to be completed by 11:59 p.m. (ET) on Friday of Module/Week 8.1. Movies are distributed in a variety of forms, not just first run theatrical presentations.What other ways are movies distributed? What are the different price points? Usingthis information, draw a fully labeled graph of the market for movies in which thedistributor of the film price discriminates. (NOTE: This should not be perfect pricediscrimination.)2. Assume the following game is played one time only. Based on the information in thepayoff matrix, PNC Bank and Citizens Bank are considering an implicit collusiveagreement on interest rates. Payoffs to the two firms are represented in terms ofprofits in thousands of dollars:Citizens BankCollude: RaiseRatesCollude: RaiseRates(900, 600)(700, 800)Defect: Keep Rateswhere they arePNCDefect: Keep Rateswhere they are(1100, 300)(800,400)a. Does PNC have a dominant strategy? What is it? Does Citizens have a dominantstrategy? What is it?b. Does the result of your answer change if the game is played an infinite number oftimes? Why or why not. Properly use game theoretic terminology in your answer.Page 1 of 2ECON 2133. What is the profit maximizing output of the monopolist shown below?_____________What price do they set? _______________________What is the mark up over cost? _______________________P r ic eWhy will this price not fall?108M CATC6D4M R2010203040O u tp u t p e r d a y504. Draw the cheese market for the United States showing the world price as the price forthis market. How much cheese does the U.S. import at the world price? Now assumethat the cheese lobby promotes and successfully gains a tariff on cheese. Whathappens to the price paid by cheese lovers in the U.S.? How does this change thevalue generated by the market? Why do you say this? Where does this appear in yourgraph?
