Loralie feels guilty. She spends much of her day goofing around and never gets caught, but if Lillianne, who works at the next desk, replies to her or says anything, the boss seems to magically show up, and Lillianne gets reprimanded for wasting time. According to equity theory, which of the following scenarios would be the most productive way for Loralie to get rid of her guilt? a. purposely get caught goofing off the next time the boss is near.
b. file harassment charges against the boss on Lillianne's behalf.
c. ignore Lillianne and pretend she does not work next to her.
d. stop goofing off and remain as focused as Lillianne
e. teach Lillianne to goof off without getting caught

1. consider a two-firm industry. firm 1 (the incumbent) chooses a level of output qı. firm 2 (the potential entrant) observes qı and then chooses its level of output q2. the demand for the product is p 100 q, where q is the total output sold by the two firms which equals qi +q2. assume that the marginal cost of each firm is zero. a) find the subgame perfect equilibrium levels of qi and q2 keeping in mind that firm 1 chooses qi first and firm 2 observes qi and chooses its q2. find the profits of the two firms-n1 and t2- in the subgame perfect equilibrium. how do these numbers differ from the cournot equilibrium? b) for what level of qi would firm 2 be deterred from entering? would a rational firm 1 have an incentive to choose this level of qi? which entry condition does this market have: blockaded, deterred, or accommodated? now suppose that firm 2 has to incur a fixed cost of entry, f> 0. c) for what values of f will entry be blockaded? d) find out the entry deterring level of q, denoted by q1', a expression for firm l's profit, when entry is deterred, as a function of f. for what values of f would firm 1 use an entry deterring strategy?