Evaluate a real situation between two actors; it could beany scenario: two competing businesses, two countries in negotiations, two kids trading baseball cards, you and another person involved in an exchange or anything else.

Respond to the following discussion item:
Evaluate a real situation between two actors; it could beany scenario: two competing businesses, two countries in negotiations, two kids trading baseball cards, you and another person involved in an exchange or anything else. Use game theory to analyze the situation and the outcome (or potential out come). Be sure to explain the incentives, benefits and risks each face.
Your response(s) should comply with the formatting, content, and word count guidelines for APA. Parameters for response should be 250. Use APA format for your reference citations.

Chapters 13,14, 15 and 16 will be covered. Below are brief descriptions of some notes that is covered in each of the assigned chapters.
⦁ Required Study Materials
⦁ Cowen and Tabarrok Chapters 13-16 Modern Principles of Economics, 3rd Edition (New York: Worth Publishers, 2013), Tyler Cowen and Alex Tabarrock.

Theme verses: Exodus 20:1-5, 14; I Kings 3:16-28

Supplemental Study Materials
Marginal Revolution University
Marginal Revolution
Acton Institute
Institute for Faith, Work and Economics
Chapter 13 Narrative
Markets for electricity, cable TV, and a few other products are considered throughout the chapter.The market for Combivir, also casually referred to as the AIDS cocktail,
receives recurring attention. Combivir helped reduce deaths from AIDS in the United States by 50 percent between 1995 and 1997. It sells for approximately
$12.50 per pill (about $10,000 per year’s prescription) yet only costs approximately 50 cents to manufacture each tablet. The chapter considers three main reasons why
competition has not pushed price down to marginal cost:

> monopoly power;
> the “you can’t take it with you effect;” and
> the “other people’s money” effect.

Market Power
GlaxoSmithKline owns the patent on Combivir. A patent conveys monopoly power to GlaxoSmithKline, preventing potential competitors from entering the market and
allowing them to raise price above average cost. Monopoly power gives Glaxo-SmithKline the power to raise price above average cost without fear that other firms will enter the market.

India does not recognize GlaxoSmithKline’s patent. Competition in India pushes the price of equivalent drugs down to just 50 cents

Chapter 14 Narrative
The chapter begins with a narrative about a drug smuggling syndicate operating out
of Belgium.They smuggle Combivir, the HIV treatment discussed in the previous
chapter, from Kenya, Uganda, and Tanzania into Europe. GlaxoSmithKline, the manufacturer of Combivir,was selling the drug for $12.50 per pill in Europe but for only
about 50 cents in Africa. The story of Combivir is used throughout much of the chapter to illustrate how price discrimination can maximize profit, lead to increased
efficiency, and force companies to try to limit arbitrage opportunities. Universities, computer software, cable television, and computer printers are other markets discussed
in the chapter.

Chapter 15 Narrative
Much of this chapter examines the economics of cartels by analyzing the OPEC oil cartel. Other cartels, including professional sports leagues and the government supported
milk cartel, are also discussed. Game theory—the study of strategic decision-making—is introduced to understand cartel behavior.

Chapter 16 Narrative
A network good’s value to one consumer increases the more other consumers use the good.The textbook uses the example of Facebook.With more than 500 million
active users, it’s easier to connect with your friends on that network than a smaller one. Similarly, many online dating networks enjoy critical mass. If you’re looking for
a date, it’s easier to find one among Match.com’s 20 million users than it is on a smaller network. Microsoft Word is valuable to consumers because it is easy to share and swap files
with the many other users of Microsoft Word. Microsoft Word continues to command high prices even though similar word processors such as OpenOffice are available
for free.

Network goods tend to have four features:
1. Network goods are usually sold by monopolies or oligopolies
2. When networks are important, the “best” product may not always win
3. Standards wars are common in establishing network goods
4. Competition with network goods is “for the market” instead of “in the
market”