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Problem 21 Leo and Jerry are kids with entrepreneurial minds. They compete for customers by selling nearly identical homemade lemonade in front of a solitary shopping center. Both boys can either work hard or slack off. The following outcomes are possible: 1) Both work hard and get $80; 2) Both slack off and get $40; 3) One works hard and gets $90, while the other slacks off and gets $20. Since they are kids, however, the making of lemonade comes with a very expensive trial and error method, and the waste of lemons is high. Leo's costs are $95, while Jerry's are an astounding f285. The costs are taken out of Leo and Jerry's revenues. Assuming that the boys compete in a one-shot simultaneous game, and they do not face costs other than those which arise out of their disastrous treatment of lemons, what will be the equilibrium outcome? a) Both slack off; b) Both work hard; c) Leo works hard, Jerry slacks off; d) Leo slacks off, Jerry works hard e) There is no pure strategy equilibrium f) There are multiple pure strategy equilibria