7.3 Atlas Construction wants to buy some custom equipment from Vulcan Manufacturing. Atlas’

maximum willingness to pay for the equipment is

$320 (thousand). Vulcan is willing to sell the equipment as long as it gets at least $260 (thousand). The two companies bargain over the price, p. The net benefit to Atlas is 320 - p and the net benefit to Vulcan is p - 260. The Nash product is the product of these two benefits.

a. Use Excel to create a spreadsheet with columns for the price, the benefit to Atlas, the benefit to Vulcan, and the Nash product. Let the price go from 260 to 320 in increments of 10 and find the price that maximizes the Nash product.

b. Now suppose that Atlas’ maximum willingness to pay is only 300. What is the price that arises from Nash bargaining now? Explain why the price would change in this way.