Firms J and K produce compact-disc players and compete against one another. Each firm can develop either an economy player (E) or a deluxe player (D). According to the best available market research, the firms€™ resulting profits are given by the accompanying payoff table.
a. The firms make their decision independently, and each is seeking its own maximum profit. Is it possible to make a confident prediction concerning their actions and the outcome? Explain.

b. Suppose that firm J has a lead in development and so can move first. What action should J take, and what will be K€™s response?
c. What will be the outcome if firm K can movefirst?

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Firm K 30, 55 50, 60 Firm J DI 40,75 25, 50