Posted: September 14th, 2016

erive the market demand function and the marginal revenue function for yourapp Newton (Note. if the market demand isp=abq;then the marginal revenue function isMR(q) =a2bq):

to whom it may concern, it is a group assignment but my part to do is question 1 and question 4. I’m gonna write the questions here. i will be uploading the lecture slides to help you complete this assignment. if you need anything don’t hesitate to contact me. 1.(10 Marks) Stock Market and Beauty Contest.John Maynard Keynes argued that the stockmarket is like a beauty contest in which your own opinion doesnÃt matter; you pick the face thatyou think others will choose.1In other words, people price shares not based on what they thinktheir fundamental value is, but rather on what they think everyone else thinks their value is, orwhat everybody else would predict the average assessment of value to be. Consider the followinginvestment game. Each group in the class is assessing the stock price of CJÃs Entertainment, Inc.In order to decide whether to buy shares of CJÃs Entertainment or not, each group has to make aneducated guess on what are the stock prices deemed reasonable by other groups. Each group mayhave a di§erent opinion about the true value of CJÃs Entertainment, but it is believed to be in arange from 0 to 100 inclusive. The game rule is as follows. Each group submits a share price on CJÃsEntertainment. The price should be a number between 0 and 100. Suppose there areNgroups, andthe prices arep1;:::;pN:Denote bymthe median price amongfp1;:::;pNg:In other words, half ofthe pricesfp1;:::;pNgare less or equal tom;and the other half offp1;:::;pNgare equal or greaterthanm:If the price submitted by your group is exactly equal tom;your group receives 5 marks onpart (a) below; otherwise your group receivesmaxf0;5jthe price submitted by your groupmjgmarks on part (a). (a)(5 marks)What is the price submitted by your group?b)(5 marks)Find all Nash equilibria of this investment game. 4.(20 marks) PokÃmon Go Go Go.PokÃmon Go is a location­based AR (augmented reality) mobile game. In this game players capture,battle, and train virtual creatures, called PokÃmon, who appear on device screens as though in thereal world. To play the game, Ãrst the player needs to create an avatar by selecting a hair, skin,eye color, and outÃt. After the avatar is created, it is displayed at the playerÃs current locationalong with a map of the playerÃs immediate surroundings. Features on the map include a numberof PokÃStops and PokÃmon gyms. PokÃStops provide players with items, such as eggs, Pokà Balls,and potions and can be equipped with items called lures, which attract wild PokÃmon. Gyms serveas battle locations for team­basedking of the hillmatches. As players travel the real world, theiravatar moves along the gameÃs map. Di§erent PokÃmon species reside in di§erent areas of the world.During an encounter with a wild PokÃmon, the player may throw a Pokà Ball at it by áicking itfrom the bottom of the screen up toward the PokÃmon. If the PokÃmon is successfully caught, itwill come under the ownership of the player. Factors in the success rate of capture include the rightforce, the right time and the type of Pokà Ball used.2Suppose you have just created an app called NewtonTMfor PokÃmon Go. When encountering awild PokÃmon, this app is able to calculate the force and the trajectory of the throw of a PokÃBall to maximize your chance to catch the PokÃmon. You would like to launch this new app to themarket, but you are not sure how much your targeted customers are willingly to pay for this app.You conduct a survey for 200 potential customers and Ãnd out that 160 customers are willing tobuy the product when the pricep= 1;and 120 of them are willing to buy whenp= 2:You believethat the market demand has the following linear functional form:p=abq: (a)(4 marks)Derive the market demand function and the marginal revenue function for yourapp Newton (Note. if the market demand isp=abq;then the marginal revenue function isMR(q) =a2bq): (b)(4 marks)Suppose the marginal cost of production isMC(q) = 1:Find the proÃt­maximizingoutputqand prices: (c)(3 marks)What is the elasticity of demand atp?Denote the elasticity atpby:Showthat the Lerner Index (Price Markup)pMC(q)pis equal to1:Suppose now another new app comes out to the market called Super NewtonTM. Not onlySuper Newton allows the user to calculate the best force and trajectory of the throw of a PokÃBall, but also it provides the user the exact timing of throwing; hence, Super Newton gives a