Marge Sampson produces and sells 400 jars of homemade jelly each month for $3 each. Each month, she pays $200 for jars, $150 for ingredients, and uses her own time, with an opportunity cost of $500 . Her economic profits each month are:

The subgame-perfect equilibrium of a two-stage game in which firms first choose capacities and then engage in a Bertrand price setting game resembles the equilibrium in:

a. the competitive model. b. the Cournot model. c. the cartel model. d. the price leadership model.

Commitment strategies:

A. are not necessary to reach a mutually beneficial equilibrium in repeated games. B. usually fail to work. C. are always needed to reach a mutually beneficial equilibrium in single-round games. D. are not observed in reality.