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Imagine that there are two snowboard manufacturers (FatSki and WideBoard) in the Reno market. Each firm can either produce ten or twenty snowboards per
Imagine that there are two snowboard manufacturers (FatSki and WideBoard) in the Reno market. Each firm can either produce ten or twenty snowboards per day. The table below shows the profit per snowboard for each firm that will result given the joint production decisions of these two firms. Number of Snowboards Produced by: FatSki 10 10 20 20 WideBoard 10 20 10 20 Total Industry Production Per Day 20 30 30 40 $ Profit Per Snowboard 220 180 180 100 a. Draw the game payoff matrix for this situation. (2 points) b. Does either player have a dominant strategy? If so, what is it? (1 point) c. What is the Nash equilibrium solution and how many boards should each player produce each day? (1 point) d. Since FatSki and WideBoard must play this game repeatedly (i.e. make production decisions every day), what strategy would you advise them to play in order to maximize their payoff over the long term? (1 point)
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