a.Consider the following game with the payoff matrix for an oligopoly consisting of two firms, Company A and Company B:

Company B

LMH

L

A win $3,000

B win $4,000

A win $3,000

B win $3,000

A win $1,000

B win $1,000

Company A

M

A win $1,000

B win $6,000

A win $2,000

B win $4,000

A win $3,000

B win $7,000

H

A win $2000

B win $2000

A win $1000

B win $2000

A win $2000

B win $1000

i) Both A and B have three moves. Suppose there is no collusion between them, does A or B have dominant strategies? If so, what are their dominant strategies?

ii) What is(are) the Nash equilibrium(equilibria) in this game?

b. Unskilled workers receive low wages because their average productivity (i.e. average product) is below that of skilled workers. True, false or uncertain. (No mark will be given to unsupported answer.)

c. Explain, with real-life examples, the four basic types of barriers to entry in monopoly.