Suppose that Toyota and GM are considering entering a new market for electric automobiles and… 1 answer below »

Question 1
Suppose that Toyota and GM are considering entering a new market for electric automobiles and that their profits (in millions of dollars) form entering or staying out of the market are the following:
1. If the firms make their decisions simultaneously, do either or both firms enter?
2. How would your answer change if the U.S. government committed to paying GM a lump-sum subsidy of $50 million on the condition that it would produce this new type of car?
Question 2
Two firms are planning to sell 10 or 20 units of their goods and face the following payoff matrix:
1. What is the Nash equilibrium if both firms make their decisions simultaneously? Why?
2. Suppose that Firm 1 can decide first. What is the outcome? Why?
3. Suppose that Firm 2 can decide first. What is the outcome? Why?