ECON 213 PROBLEM SET 4
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? Using
this information, draw a fully labeled graph of the market for movies in which the
distributor of the film price discriminates. (NOTE: This should not be perfect price
discrimination.)
2. Assume the following game is played one time only. Based on the information in the
payoff matrix, PNC Bank and Citizens Bank are considering an implicit collusive
agreement on interest rates. Payoffs to the two firms are represented in terms of
profits in thousands of dollars:
Citizens Bank
Collude: Raise
Rates
Collude: Raise
Rates
(900, 600)
(700, 800)
Defect: Keep Rates
where they are
PNC
Defect: Keep Rates
where they are
(1100, 300)