Suppose you and a rival are the only producers of oysters in an isolated town. Every morning you both dive for oysters that you will sell in the market that afternoon. Each morning, you both have a choice of bringing up 10 or 20 dozen oysters; each dozen you bring up has a marginal cost of $10. If 20 dozen oysters are brought to market in total, they will sell for $35 each. If 30 dozen oysters are brought to market, they will sell for $25 each. If 40 dozen oysters are brought to market, they will sell for $20 each. The following table shows the profit you and a rival can expect to earn based on your choice of bringing up 10 or 20 dozen oysters each:

a. Verify that the profits represented in the table above are accurate.
b. Where is the Nash equilibrium in the game you and your rival play?
c. Is the Nash equilibrium one that you and your rival would agree to if you were to discuss production before diving each day? If not, explain why that agreement is unlikely to be honored.
d. Draw a parallel between the game described above and the advertising game Disney and Warner Brothers played in Table 11.1.

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Your Rival l0 dozen 20 dozen 10 dozen 250,250 50, 300 20 dozen 300, 150 200,200