1.Nash Equilibrium.

Two coffee shop owners (Firm A and Firm B) want to open new branches.Each has the resources to open at only one location.There are two possible locations.The first is in a downtown mall in the business district, while the second is in a suburban mall

The downtown mall is more attractive location.If there is only one coffee shop in the downtown mall, the firm's profits will be $200.

The suburban mall is less attractive. If there is only one coffee shop in the suburban mall, its expected profits are $150

But if the two firms locate in the same mall, each will earn half the profits.So, each will make $100 in profits if they are both in the downtown mall and each will make $75 in profits if both are in the suburban mall

Assume that they both make their decision at the same time (i.e., this is a simultaneous game.

a.Set up a matrix that describes the two firms' decisions and payoffs.

b. UnderlineFirm A'sbestresponse to each of firm B's strategies

c.UnderlineFirm B's best response to each of firm A's strategies

d. Are there any Nash Equilibrium in this game?If so, what is it/are they?

e.Ifthereis a Nash equilibrium, is it/are they efficient?If not, what cell (i.e. pair of strategies) makes both players better off?