Question 2 3 pts Select the correct statement concerning static games. (O If each player has a dominant strategy then there exists a dominant strategy equilibrium but no pure strategy Nash equilibrium. (O If each player has a dominated strategy then each player must also have a dominant strategy. Hint: See Table 12.2 in your textbook. (O In astandard prisoners' dilemma the equilibrium changes if one of the players chooses first and the other player chooses second (i.e., a sequential game). (O If a game does not have a pure strategy Nash equilibrium it may still have a maximin solution. Question 3 3 pts Which of the following statements is an accurate description of the following static game. Produce Sweet Cereal |Produce Crispy Cereal Produce Sweet Cereal Produce Crispy Cerea' (O For x > 2 this game is a prisoners' dilemma. (O For x > 2 this is a coordination game which can be reduced to a single pure strategy Nash equilibrium using the Pareto Criteria. (O For x > 2 this is a coordination game which cannot be reduced to a single pure strategy Nash equilibrium using the Pareto Criteria. (O There exists a value for x which results in this game not having a pure strategy Nash equilibriujm. Question 4 3 pts Air Canada and WestJet compete on the Vancouver-Calgary route. The number of passengers per quarter is the strategic variable and profits (in millions of dollars per quarter) for the two firms are as given in the table below. There is a downward-sloping demand curve in the market. WestJet 50 20 10 50 0, 0 3, 1 6, 2 Air Canada 20 1, 3 5, 5 7, 4 10 2, 6 4, 7 6, 6 O In the Stackelberg game where Air Canada is the leader, the equilibrium price is higher than under Cournot competition. O In the Stackelberg game where Air Canada is the leader, WestJet matches Air Canada's quantity choice. O Air Canada would be willing to pay up to $1 million per quarter to be assigned the role of Stackelberg leader rather than competing with WestJet in Cournot competition. O Pre-play communication ("cheap talk") is one way that Air Canada can credibly establish itself as Stackleberg leader