Question

Q-7: Refer to the information provided in Table below to answer the question that follows. Remember both Asif & Rouhaan has strong competition and their firms are non-collusive (non-cooperative).

 

“Table”

                                                        

	Rouhaan's   Strategy Advertise	Rouhaan's   Strategy Don't Advertise
Asif's Strategy	A's   profit $200 thousand	A's   profit $300 thousand
Advertise	R's   profit $200 thousand	R's   profit $100 thousand
Asif's Strategy
Don't	A's   profit $100 thousand	A's   profit $250 thousand
Advertise	R's   profit $300 thousand	R's   profit $250 thousand

 

a)     What is the Nash equilibrium in the game?

 

b)    What is the Asif’s & Rouhaan’s profit at Nash equilibrium in this game?

 

c)     What is the Asif’s dominant strategy? Explain this dominant strategy in few lines?

 

d)    What happens if both Asif & Rouhaan Cooperate with each other? What will happen to their profits and strategy? Explain and compare cooperative and non-cooperative strategies with actual profits given in table?

 

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