Suppose that there are two fishing companies who are behaving non-cooperatively. Assume that the two sides can send out 1 or 2 fleets each, and the more fleets in the area. The more fish they catch, but the lower the catch of each fleet. the matrix below shows the profits per week earned by the two sides.

company 1(1 fleet = 10,000/10,000)

                    (2 fleet = 12,000/4000)

company 2 (2 fleet =4000/12000)

                         7,500/7500

a) what is the non-cooperative Nash equilibrium? will each side choose to send out 1 or 2 fleets?

b) suppose that the fish stocks are getting depleted. Each side consider s the future and comes to a tit-for-tat agreement, where each side will send 1 fleet as long as the other does the same. If either breaks the agreement,and sends out a second fleet, the other company will also send out a second fleet and will continue to do so until the other company sends out only 1 fleet. if both companies follow this strategy, how much profit will each company make a week?

1. use the conditions for monopolistic competition to decide which of the following firms are likely to operate as monopolistic competitors. If they are not, are they monopolists, oligopolists or perfectly competitive firm?

a) A local band that plays for parties,etc.

b) minute maid,a producer of juice boxes.

c) your local dry cleaner

d) A famer who produces soyabeans.