Hi, could someone answer and explain question 9?
b. For what X is taking the drug the Nashequilibrium? c. Does making the drug safer (that is, lowering X}make the athletes better or worse off? Explain. . Little Kona is a small coffee company that is consider- ing entering a market dominated by Big Brew. Eachcompany’s proﬁt depends on whether Little Konaenters and whether Big Brew sets a high price or a lowprice: ‘ _ Blewmkes .. _: -‘ ._ érew reeks;_ _ 53 maﬁa: _ $1 with:‘=<_‘ ._" . _ Mute;Sistine -‘Don’t Enter BREWER. 1! WWW” 359 a. Does either player in this game have a dominantstrategy? 13. Does your answer to part (a) help you ﬁgure outwhat the other player should do? What is the Nashequilibrium? Is there only one? c. Big Brew threatens Little Kona by saying, “If youenter, we’re going to set a low price, so you hadbetter stay out.” Do you think Little Kona shouldbelieve the threat? Why or why not? d. If the two ﬁrms oould collude and agree on howto split the total pmﬁts, what outcome would theypick? Go to CengageBrainxom to purchase access to the proven,critical Study Guide to accompany this text, which featuresadditional notes and context, practice tests, and much more.
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