Question One Two firms Indongo Ltd and GWN Ltd firms both produce cars. Each firm is profit-driven, seeking the highest

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Question One Two Firms Indongo Ltd And Gwn Ltd Firms Both Produce Cars Each Firm Is Profit Driven Seeking The Highest 1 (111.78 KiB) Viewed 22 times

Question One Two firms Indongo Ltd and GWN Ltd firms both produce cars. Each firm is profit-driven, seeking the highest profit. If both firms decide to seek higher profits, each will earn a profit of N$100,000. If one of the firms decides to make high profits and the other chooses lower profits, then the firm deciding for higher profits loses customers, incuring a loss of N$20,000 while the firm choosing lower profits earns N$ 120,000 (its unit profit is low, but its volume is high). If both firms choose low profits, then each firm earns a profit of N$ 60,000. Each firm cares only about its profit. [10 Marks] i. Represent this game in a payoff matrix. ii. Decide the dominant strategy for each firm. iii. What type of game are the firms playing. Explain [5 Marks] [5 Marks]