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Suppose the game is infinitely repeated what

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10.Suppose the game is infinitely repeated. What strategies will each firm utilize?a.firm A will charge a low price, and firm B will charge a low price. [the firms can earn higherprofits by cooperating on a better outcome and using trigger strategies to support it.]b.firm A will charge a high price, and firm B will charge a low price. [firm A has no reason tolose money in each period as this is not a best response to firm B charging a low price.]c.firm A will charge a low price, and firm B will charge a high price. [firm B has no reason tolose money in each period as this is not a best response to firm A charging a low price.]d.firm A will charge a high price, and firm B will charge a high price. [correct;the firms cancoordinate on the better payoffs by using trigger strategies, such as a tit-for-tat strategy.]
11.You, a real-estate developer, own a piece of land in Nassau, Bahamas, next to an equal size piece ofland owned by a competitor. Both of you have the choice of building a casino or a hotel. Your payoffsare as follows:Your competitorCasinoHotelYouCasinoHotel3,3205,202How much is it worth to you to get your casino building permit first?,5,2
Chapter 16Multiple Choice Questions1.For threats or commitments to be effective, they must be
2.Fred and his employer both know that Fred can generate $200,000 of profit per year for his company.After negotiations, they agree that he will earn $110,000 in annual compensation. What does thisimply for the value of his outside or next best alternative?

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