Imagine that there are two snowboard manufacturers (FatSki and WideBoard) in the market. Each firm can either produce ten or twenty snowboards per day. The table below (see attached) shows the profit per snowboard for each firm that will result given the joint production decisions of these two firms.Draw the game payoff matrix for this situation. Does either player have a dominant strategy? If so, what is it? What is the Nash equilibrium solution and how many boards should each player produce each day? Since FatSki and WideBoard must play this game repeatedly (i.e. make production decisions every day), what strategy would you advise them to play in order to maximize their payoff over the long term? $ Profit PerTotal IndustryProduction Per DayNumber of Snowboards Produced by:SnowboardFatSkiWideBoardmorenovpn101020220102030180201030180202040100

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Imagine that there are two snowboard manufacturers (FatSki and WideBoard) in the market. Each firm can either produce ten or twenty snowboards per day. The table below (see attached) shows the profit per snowboard for each firm that will result given the joint production decisions of these two firms.

Draw the game payoff matrix for this situation.
Does either player have a dominant strategy? If so, what is it?
What is the Nash equilibrium solution and how many boards should each player produce each day?
Since FatSki and WideBoard must play this game repeatedly (i.e. make production decisions every day), what strategy would you advise them to play in order to maximize their payoff over the long term?

$ Profit Per
Total Industry
Production Per Day
Number of Snowboards Produced by:
Snowboard
FatSki
WideBoard
morenovpn
10
10
20
220
10
20
30
180
20
10
30
180
20
20
40
100

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