1. (Dominant Strategy; Dominant Strategy Equilibrium; Nash Equilibrial In the late 20005, Boeing decided to build a new plant to manufacture the Boeing 787 Dreamliner. Many areas were hoping that Boeing would decide to build the plant in their state. To attract Boeing, the states considered offering large tax incentives. Assume that two states were under serious consideration by Boeing: Washington and South Carolina. Also assume that each state had two options: no incentive or offer an incentive. Notice that in the payoffs that follow, Boeing selects Washington if both states offer an incentive. (12 points) , , South CarolinalSC) No Incentive W gets 10 W 915 0 Washington SC gets 0 5c gets 15 (W) incentive ' W gets 5 SC gets 0 a) Does Washington have a dominant strategy? if so, what is it? Explain your answer. b) Does South Carolina have a dominant strategy? If so, what is it? Explain your answer. c) Is there a dominant strategy equilibrium? if so, what is it? Explain your answer. d) Are there any Nash equilibria in this game? If so, what are they? Explain your answer. 2. A rm employs capital as a fixed input and labor as a variable input in the short run. if the cost of capital falls, what will happen to the AVC, ATC, and MC curves? Explain. (12 points)