1. Nash Equilibria play a central role when analysing simultaneous as well as sequential games. Define the concept of a Nash Equilibrium and name and explain two possible limitations of this concept for predicting the strategic decisions of firms. 2. You work for a venture capital firm and you are evaluating three proposals (A, B, C) for funding. All three firms are start-ups in the Artificial Intelligence (AI) sector. Among many other things, all proposals include an estimate of the cross-price elasticity (CPE) of the firm's own product to the main product of a large software firm X. These are the three CPE estimates: Firm A: 0.15 Firm B: 0.9 Firm C: -0.7 It is well-known that for legal reasons, Firm X's production cost will go up by 20% and that this will lead to higher prices for its product. Assuming that the funding proposals are equally attractive otherwise, which firm would you invest in? Explain your thinking. 3. You are a product manager for a firm selling sunbeds and you know that competition in sunbeds is mainly on price. Your friend works for a company selling parasols (large sun umbrellas) and knows that competition in the parasol market is also in prices. Are the prices for sunbeds and parasols strategic complements or strategic substitutes? Explain your answer. 4. What is the internal architecture of a firm and explain how it can contribute to a firm's competitive advantage