Q. Little Kona is a small coffee company to is considering entering a market dominated by Big Brew. Each company's profit depends on whether Little Kona enters also whether Big Brew sets a high price or a low price:

Big Brew threatens Little Kona by saying: ‘If you enter, we will set a low price, so you had better stay out.'

a. Does either player in this game have a dominant strategy?

b. Does your answer to part (a) help you figure out Illustrate what the other player should do?

c. Illustrate what is the Nash equilibrium? Is there only one?

d. Big Brew threatens Little Kona by saying, ‘If you enter, we're going to set a low price, so you had better stay out. ‘Do you think little Kona should believe the threat? Explain why or explain why not?

e. If the firms could collude also agree on Elucidate how to split the total profits illustrate what outcome would they pick?