Q. 14.21 Two firms are competing in an oligopolistic industry. Firm 1, the larger of the two firms, is contemplating its capacity strategy, which could be either "aggressive" or "passive." The aggressive strategy involves a large increase in capacity aimed at increasing the firm's market share, while the passive strategy involves no change in the firm's capacity. Firm 2, the smaller competitor, is also pondering its capacity expansion strategy; it will also choose between an aggressive strategy and a passive strategy. The following table shows the profits associated with each pair of choices: Firm 2 Aggressive Passive 25, 9 33, 10 Aggressive Passive Firm 1 30, 13 36, 12 a) If both firms decide their strategies simultaneously, what is the Nash equilibrium? b) If Firm 1 could move first and credibly commit to its capacity expansion strategy, what is its optimal strategy? What will Firm 2 do?

Lets again consider the same two firms from the previous question. In this game, both firms have already entered the market and now decide what price to charge. For concreteness, suppose that there are 10 million customers, each of whom will buy from one of the two firms, and that each firm decides whether to charge $20 or $30 (with costs of zero). If both firms charge the same price, they will each sell to 5 million customers, but if one charges the low price ($20) and the other charges the high price ($30), 8 million will buy from the low-price firm and 2 million will buy from the high-price firm. (a) Create a payoff matrix for this game. (b) Identify any dominant strategies for either of the two players. (C) Identify any Nash equilibrium in the game, using the best response analysis. (d) Is this a Prisoner's Dilemma situation?

The dropdown options are "Cleans" or "Does not clean." thank you!

Two men’s clothing stores that compete for most of the market in a small town in Ohio and will choose their weekly advertising levels sequentially. The newspaper advertising department calls the clothing stores in alphabetical order to find out how much advertising each firm wishes to buy. Somehow — and nobody at the newspaper knows exactly how this happens — Arbuckle’s advertising decision “leaks out” to Mr. B’s, which then knows Arbuckle’s advertising decision when it makes its advertising decision for the week. The following payoff table facing the two firms, Arbuckle & Son and Mr. B’s, shows the weekly profit outcomes for the various advertising decision combinations. The payoff table is common knowledge. Use this payoff table to construct the appropriate sequential decision on the blank game tree provided below. If the manager at Arbuckle and Son employs the roll-back method to make the advertising decision for Arbuckle, the likely outcome will be: Multiple Choice $5,000 of…