Question

Bud (red squares) 20,000 litres 10,000 litres 20,000 litres Bud and Wise are the only two producers of aniseed beer, a New Age product designed to displace root beer. They know that if they both limit production to 10,000 litres a day, they will make the maximum attainable joint profit of $200,000 a day—$100,000 a day each. They also know that if either of them produces 20,000 litres while the other produces 10,000 litres a day, the one that produces 20,000 litres will make an economic profit of $300,000 and the one that sticks with 10,000 litres will incur an economic loss of $100,000 And they know that if they both increase production to 20.000 litres a day, they will both make zero economic Construct a payoff matrix for the game that Bud and Wise must play. >>> The payoffs in the matrix are in dollars. Do not enter a dollar sign. >>> If the firm incurs an economic loss, indicate the loss with a minus sign. If the firm makes an economic profit, do not include a plus sign Wise (blue squares) 10,000 litres

Answer 1

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