1 . Which statement in terms of predatory conduct is correct?

a. None

b. It is more likely an incumbent firm adopting a limited pricing strategy if it is costlier for the potential entrant to enter.

c. The incumbent firm is going to adopt a limited pricing strategy regardless the fixed cost of the potential entrant.

d. It is less likely an incumbent firm adopting a limited pricing strategy if it is costlier for the potential entrant to enter.

2 . Suppose two firms chooses their prices simultaneously each period and the game repeats infinitely period. Both firms share the same constant marginal cost and produce homogeneous good. Suppose they follow the grim trigger strategies we described in class, which statement is correct?

a. The grim trigger strategy profile can be a NE if the discount factor equals 0.65.

b. The grim trigger strategy profile can be a NE if the discount factor equals0.45.

c, The grim trigger strategy profile can be a NE if the discount factor equals 0.35.

d. The grim trigger strategy profile can be a NE if the discount factor equals 0.49.

3 . Which statement is correct regarding the sequential Hotelling model?

a. The leader makes a lower profit than the follower.

b. The leader makes a higher profit than the follower.

c. It is better for leader to wait and hide his price. That is, the leader is better off in the setting that both firms post prices simultaneously.

d. Both leader and follower makes the same profits.