Answer Happy

Instructions: This assignment is worth 15 marks and is due on
Wednesday, April 27, by cob. After that, there is a 25% per hour
penalty on the assignment grade.
1 Suppose there are two companies selling personal virtual
assistants (PVAs) in Venturilla, a small island in the West Afrikan
Sea. Suppose further that each company can charge either a high
price for PVAs or a low price. If one company charges a low price,
it earns low profits if the other company charges a low price also,
and high profits, if the other company charges a high price. On the
other hand, if a company charges a high price, it earns very low
profits if the other company charges a low price and medium profits
if the other company charges a high price also.
a In the table below, fill in the payoff matrix for this game. 5
marks
b What is each company’s dominant strategy? 2 marks
c What is the Nash equilibrium in this game? 3 marks