QUESTION 5 Cools and Walles are large supermarket chains that own and dominate a large share in Australia's groceries market. They have large market power and can make decisions to change the price for many household items and groceries. Cools and Walles are often in competition to gain market share and will have to work out their respective pricing strategies. Answer the following questions: a. Assume Cools and Walles now introduced a 10% discount card for all senior citizens buying groceries at their supermarkets. This is an example of price discrimination. Type F for First Degree, S for Second Degree, T for Third Degree or P for Peak Load Pricing. b. Walles is looking to start a new promotional offer that will see an average reduction of grocery prices by 3%. Cools is aware of this promotional offer and is planning to introduce something similar. The payoff matrix (with payoffs represented in millions of dollars, Cools being the top player and Walles being the player on the left) is shown below. What decision should Cools make?| . Type C for Cut or M for Maintain. Maintain Cut Maintain 135, 150 55, 200 Cut 185, 60 95, 95 c. Does this game satisfy the criteria for a Prisoner's Dilemma? ' | Type Y for Yes or N for No. d. If Cools and Walles are allowed to communicate and plan their pricing together, would they be better off? ' '. Type Y for Yes or N for No. QUESTION 6 To reduce traffic congestion in Brisbane's inner-city suburbs, the Queensland Government decides to build a new train line between the Bowen Hills and Dutton Park. To minimize traffic delays, construction of this tunnel will occur during the night. Which of the following statements is true? (O The marginal social cost should include the benefits from the reduction in traffic volume as a result of building the train line. (O The marginal social cost of building the train line should include the costs associated with the inconvenience of required track closures of other train lines. (O The construction will not lead to a deadweight loss, as there are no externalities associated with the construction of the train line. (O The Queensland Government should address the negative externalities associated with construction by subsidising the cost of construction. (O The cost to construct the train line captures all economic costs by ensuring the train line is only constructed during the night