Bud and wise are the only two producers of aniseed beer, a new age product designed to displace root beer. bud and wise are trying to figure out how much of this new beer to produce. they know that if they both limit production to 10,000 gallons a day, they will make the maximum attainable joint profit of $200,000 a day—$100,000 a day each. they also know that if either of them produces 20,000 gallons a day while the other produces 10,000 a day, the one that produces 20,000 gallons will make an economic profit of $150,000 and the one that sticks with 10,000 gallons will incur an economic loss of $50,000. each also knows that if they both increase production to 20,000 gallons a day, they will both make zero economic profit.
a. construct a payoff matrix for the game that bud and wise must play
b. find the nash equilibrium of the game that bud and wise play.
c. what is the equilibrium of the game if bud and wise play it repeatedly?