Exercise 2. Markets for aircrafts Airbus (a European rm) and Boeing (an US rm) are competitors in the market for aircrafts. The demand for aircras has gone down signicantly in recent times - in fact, so much so that only one player can protably operate in the market. If both stay in the market. each loses $5 million. If both exit the market each gets 0, where as if one stays and one exits, the one who exits gets 0 while the one who stays bags $100 million. (i) Identify the set of pure strategies for each player. (ii) Write down the normal form game and the associated payo' matrix. _ (iii) Compute the set of pure strategy Nash equilibria. W Now s e the European government announces and credibly commits to $6 million subsidy for ghts-6g not exiting. That is, Airbus will receive $6 million as long as it remains in the market[note: this means $6 million gets added to Airbus's protlloss gures stated above provided it stays]. How does this affect your answers to (ii) and (iii)? Exercise 5. Beyond two strategies Provide an example of a 2-p1ayer normal form game where each player has 3 (pure) strategies such that: (i) There is no pure strategy Nash equilibrium. (ii) There are exactly three pure strategy Nash equilibria. (iii) There are exactly nine pure strategy Nash equilibria. Choose any of the three - (i), (ii), or (iii). Pick a strategy prole which is not a Nash equilibrium. Explain why