Question: 2 questions and based on the same graphic Use the game payoffs in the table below to answer the following TWO questions (Q7 and Q8).
2 questions and based on the same graphic



Use the game payoffs in the table below to answer the following TWO questions (Q7 and Q8). Suppose that we have a situation where two firms produce the same product. They must decide where to locate stores in a certain city. Suppose that each is considering locating stores in one of four communities: A, B, C, and D. Their payoffs are contained in the following matrix. Firm 2 A B C D A 0.1 2,2 3.0 1,3 Firm 1 B 1,3 3.1 4,2 4.4 C 1,3 5.6 2,0 2,1 D 0,5 2,3 2,1 3,1What is (are) the Cournot Nash equilibrium (equilibria) when the two firms make simultaneous decisions? There is no pure strategy Nash equilibrium. (Firm 1, Firm 2) = (C, B) O (Firm 1, Firm 2) = (B, D) O (Firm 1, Firm 2) = (B, D) and (C, B) O (Firm 1, Firm 2) = (B, C) and (D, B)What is (are) the Stackelberg Nash equilibrium (equilibria) when Firm 1 makes the decision FIRST and Firm 2 moves later? O (Firm 1, Firm 2) = (C, B) O There is no pure strategy Nash equilibrium. O (Firm 1, Firm 2) = (B, C) and (D, B) O (Firm 1, Firm 2) = (B, D) O (Firm 1, Firm 2) = (B, D) and (C, B)
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