Question: 1 . Bud and Wise are the only two producers of aniseed beer, a New Age product designed to displace root beer. Bud and Wise
Bud and Wise are the only two producers of aniseed beer, a New Age product designed to displace root beer. Bud and Wise are trying to figure out how much of this new beer to produce. They know:
i If they both produce litres a day, they will make the maximum attainable joint economic profit of $ a day, or $ a day each.
ii If either firm produces litres a day while the other produces litres a day, the one that produces litres will make an economic profit of $ and the other will incur an economic loss of $
iii If both produce litres a day, each firm will make zero economic profit.
a Construct a payoff matrix for the game that Bud and Wise must play.
b Find the Nash equilibrium for the game.
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