Corporate division faces the possibility of an audit

Assignment Help Microeconomics
Reference no: EM13695119

The manager of a corporate division faces the possibility of an audit every year.  She preferes to spend time preparing if she will be audited; otherwise, she would prefer to invest her time elsewhere.  The auditor, who gets recognized for uncovering problems, prefers to audit unprepared clients.  If the players match their actions(i.e., the manager prepares and the auditor audits, or the manager doesn't prepare and the auditor doesn't audit), the manager wins with a payoff of 20, and the auditor loses with a payoff of -20. If the actions don't match, the auditor wins with a payoff of 20, and the manager loses with  a payoff of -20.  Diagram this game, and comment on the equilibrium.

Reference no: EM13695119

Questions Cloud

Compared to a monopolist competitor-a monopolist faces : Compared to a monopolist competitor, a monopolist faces...
Describe the three types of unemployment : Describe the three types of unemployment. What types of government programs would be most effective in combating each type of unemployment?
Devastating impact on economies : Explain why hyperinflation has such a devastating impact on economies. Explain what it takes to stop hyperinflation
What is the meaning of tit-for-tat in game theory : How did the 1971 law that banned cigarette advertising on television solve the prisoners' dilemma for cigarette producers? What is the meaning of tit-for-tat in game theory? What conditions are usually required for tit-for-tate strategy to be the bes..
Corporate division faces the possibility of an audit : The manager of a corporate division faces the possibility of an audit every year.  She preferes to spend time preparing if she will be audited; otherwise, she would prefer to invest her time elsewhere.
Find the herfindahl index for an industry composed : Find the Herfindahl index for an industry composed of (a)three firms-one with 70 percent of the market, and the other two with 20 and 10 percent of the market, respectively; (b) one firm with a 50 percent share of the market and 10 other equalized fi..
Balance of trade deficit must always be offset net capital : "A balance of trade deficit must always be offset by net capital inflows from abroad." Agree or disagree with this statement and explain. Suppose a Japanese firm buys a 1 year treasury bill with a face value of $10,000 today for $9400. If the value o..
Entering an industry in competition with an incumbent firm : In the text, we considered a sequential move game in which an entrant was considering entering an industry in competition with an incumbent firm.  Consider now that the entrant, if fought, has the possibility of withdrawing from the industry (at a lo..
Human capital and signalling theories of education : Job A pays $30,000 a year.  Job B is completely identical in all aspects except it is located in an area that has a 10% higher cost of living.  In order to compete, Job B would need to pay _____________. This is known as a ________________. Explain t..

Reviews

Write a Review

 

Microeconomics Questions & Answers

  Consider the market for coffee at university the market

consider the market for coffee at university. the market supply is given byqs -20 pswhere qs is the quantity supplied

  What price will we observe in m2 and m3

Consider three markets: M1, M2, and M3. There are features of these markets that the Department of Justice observes and features the Department of Justice does not observe. The DOJ observes that M1, M2, and M3 have one

  Compute coefficient of price elasticity for goldsboro supply

What is the formula for measuring the price elasticity of supply Suppose the price of apples goes up from $20 to $22 a box. In direct response, Goldsboro Farms supplies 1200 boxes of apples instead of 1000 boxes.

  Determine whether the market disappears completely

Suppose that in the Akerlof example, there are only eight cars ranging in quality from 1/4 to 2 (there is no complete lemon). Hence, the mean quality level is 1.125. Determine whether the market disappears completely, and if not, how many cars will b..

  1 the owner of a small car-rental service is trying to

1. the owner of a small car-rental service is trying to decide on the appropriate numbers of vehicles and mechanics to

  Identify any point where the mrt changes.

Identify any point where the MRT changes.

  Wat does economizing problem mean for individual and for

what does the term economizing problem mean for an individual and for society? as part of your answer include the four

  The kinked demand curve describes price rigidity

The kinked demand curve describes price rigidity. Explain how the model works. What are its limitations? Why does price rigidity occur in oligopolistic markets?

  How to make a decision by weighing the marginal cost

Discuss two situations in which you made a decision by weighing the marginal cost and marginal benefits. Explain your rationale in economic terms, such as the marginal principle and principle of diminishing returns.

  Firm-level price elasticity of demand shape opportunities

How does the firm-level price elasticity of demand shape the opportunities for making profit in an industry? How does industry-level price elasticity of demand shape the opportunities for making profit in an industry?

  How does a two-part tariff differ from bundling

(a) Will a monopolist's total revenue be larger with second-degree price discrimination when the batches on which it charges a uniform price are larger or smaller Why (b) How does a two-part tariff differ from bundling

  Consider total cost and total revenue

Consider total cost and total revenue given in the table below:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd