For example, a trip between 2 islands can be done using a ferry or an inter-island crossing tunnel. For simplification, it is assumed that the quantity demanded is 27,200 round trip car trips (54,400 one-way trips) per day and demand is not affected by changes in price.

The cost to go through the pedestrian tunnel is IDR 100,000 for a one-way trip. The tunnel is already operating close to its maximum capacity by serving 48000 crossings per day. The operational and maintenance costs for the tunnel are IDR 4,800,000,000 per year and is not affected by demand.

Crossing by ferry service takes longer with the cost for 1 time crossing is IDR 50,000. Each ferry, of the 4 in operation, can serve 20 round-trip crossings (40 crossings) by accommodating 40 cars. The annual fee for each ferry is IDR 2,400,000,000 per ship. The ferry company has several ferries in reserve.

If the cost of crossing the tunnel is reduced to IDR 90,000, so that would add 960 one-way trips. Meanwhile, if the ferry company reduces the cost of the crossing to IDR 47,000, the number of crossings that will be served will increase 3200 one-way trips. If the two crossing media lower the price, there will be no change in the number of trips for each. Questions: a. Build the above situation in a strategic form (using a pay-off matrix), where the strategy used by the pedestrian tunnel manager is placed on the left side while the ferry management strategy is on the top side of the playoff matrix. Calculate the profit of the tunnel manager and ferry operator for each strategy pair in each month. It is assumed that there are 30 days in each month. b. Determine the dominant strategy of each manager! c. Show the equilibrium of the payoff matrix! d. What might happen to equilibrium if the pedestrian tunnel was not limited in capacity?