LQ2.q2.Consider the Nash equilibrium in mixed strategies of this game. Denote by PA the probability that firm A plays Quit in this equilibrium. Similarly, denote by $p_{B}$ the probability that firm B plays Quit in this equilibrium. Which of the following statements is true? CB Oa. PA = - CA - and PB = CATTA CB +TB CA Ob. PA = CB CB +HB and PB = CATIA CA CB O C. PA = CATnB and PB = CB + TA Od. PA = C CB and PB = CBTRA CA+nB O e. None of the alternatives above is correct LQ2.q3. Suppose the mixed strategy you found in the previous question is played. Denote the expected equilibrium payoffs for firm A and firm B by u Aand UB, respectively. Which of the following statements is true? O a. u Aincreases with TA and decreases with c A O b. u Adecreases with TA and increases with CA O c. uAdoes not change with CA, CB, TA Or TB O d. uAincreases with TB and decreases with CB O e. u Adecreases with TUB and increases with CBL02.q1, SECOND LONG QUESTION. This question has 6 subquestions. Firms A and B are the only firms active in a decaying market, which is going to last for exactly one more year. Firm A currently suffers losses of CA, while firm B suffers losses of GB. The firms are now simultaneously and independently deciding whether to quit the market immediately or to keep operating for one year. If only one of the firms quits, the other will be able to obtain monopoly profits for one year. These monopoly profits are JrAfor firm A and zBfor firm B. Assume that cA > 0, c3 > 0, 11.34 > 0, 1:3 > O. This strategic situation can be represented using the following matrix: Player B Quit Stay Player A Quit 0 , 0 0,213 Stay 7:14 , 0 -cA, cB Q: Which of the following statements is true concerning the Nash equilibria in pure strategies of the game described above? 0 a. There are two Nash equilibria in pure strategies for this game 0 b. There are no Nash equilibria in pure strategies for this game 0 c. There is one Nash equilibrium in pure strategies for this game 0 d. There are three Nash equilibria in pure strategies for this game 0 e. There are four Nash equilibria in pure strategies for this game