Explain why the payoff matrix in Problem 1 indicates that firms A and B face the prisoners' dilemma? Why?

The optimal strategy for firm A and firm B in problem 1(c) is to adopt its dominant strategy of charging a low price. Do firms A and B in Problem 2 face the prisoners' dilemma? Why?

 Given the following payoff matrix, (a) indicate the best strategy for each firm. (b) Why is the entry-deterrent threat by firm A to lower the price not credible to firm B? (c) What could firm A do to make its threat credible without building excess capacity?

The strategies for firm A are low price and high price and the strategies for firm B are enter and don't enter. 10(b) is asking whether firm A will use the low price as a threat if firm B enters?

What strategic industrial or trade policy would be required (if any) in the United States and in Europe if the entries in the top left cell of the payoff matrix in Table 11-8 were changed to (5, -10)?

both Boeing and Airbus would be producing the aircraft without the need for any subsidy, and no strategic industrial and trade policy would be needed whether in the U.S. or in Europe.