Question 14(Figure: Payoff Matrix I for Blue spring and purple rain) The figure shows the payoff matrix for two producers of bottled waters, Blue Spring and Purple Rain. The one time non-cooperative (Nash) equilibrium in the figure is reached when: A) Purple Rain charges a high price and Blue Spring charges a low price. B) Both firms charge a low price. C) Both firms charge a high price. D) Blue Spring charges a high price and purple rain charges a low price. Question 15(Figure: Payoff Matrix I for Blue Spring and Purple Rain) Suppose Blue spring charges a high price and purple rain does the same. In the next period, Blue Spring charges a low price and purple rain earns a loss. Purple rain tit for tat strategy would be to: A) Always charge a low price the same as it's dominant strategy. B) Always charge a high price. C) Charges a low price in the next period then charge a high price as long as Blue spring does. D) Make random changes in its price so that Blue Spring is left with no systemic strategy.

Question 14 (1 point) Figure: Payoff Matrix I for Blue Spring and Purple Rain Purple Rain High price Low price Purple Rain's Purple Rain's profit = profit = High $20,000 Blue Blue $50 000 price Spring's Spring's profit = profil = $20.000 -$2.000 Blue Spring Purple Rain's Purple Rain's profit = profit = Low Blue $2,000 $10.000 Blue price Spring's Spring's profit = profit = $50,000 $10.000 Reference: Rel 15-08