The sole supplier of masks to a remote town in Ohio, Grandma Marcellas Marvelous Masks is experiencing significant diseconomies of scale at its current production level. Marcellas economist, Hogan (who is actually her great-grandson who is pursuing a bachelors in finance at Ohio State), the CEO (Marcellas son, Ralph), and President (her daughter-in-law, Ginny) have proposed to Marcella that they split the company in two and Marcella agreed. Because of the strict anti-trust laws in western Ohio, Ralphs Handmade Masks and Ginnys The Mask Company cannot collude. They choose simultaneously and one time (i.e. their choices now set the production levels forever going forward). Their monthly payoffs are described by the following matrix. The letters are the outcome labels (e.g. A is outcome Small, Small). Payoffs are (Ralphs; Ginnys):

a. (10 points) What is/are the Nash Equilibria? List the letter(s) only.

b. (15 points) Are there any dominant or dominated strategies? If so, specify which ones you found

Ralphs Dominant: Ralphs Dominated: Ginnys Dominant: Ginnys Dominated

c. (15 points) Ginny thinks Ralph might be a little touched (i.e. crazy) from spending too much time drinking eggnog with the his Pinochle group at the local Knights of Columbus (never mind the fact that he and his pinochle partner have won the local pinochle tournament 3 out of the last 7 years). What strategy does Ginny play? Explain.

Ginny's The Mask Company" Small Mid Large Ralph's "Handmade Masks" Small A C 520; 1900 980; 1240 1240; 980 Mid D E F 750; 750 750; 980 1600; 520 Large G H I 375; 115 750; 520 2550; 415