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Q. 1. You must decide whether or not to introduce a new product. If you launch the fresh product, your competitor will have to decide whether or not to clone the new product. If you do not initiate the new product, you and your rival will earn $1 million each. If you introduce the new product and your rival clones it, you will lose $5 million and your rival will earn $20 million. If you introduce the new product and your rival does not clone, you will make $100 million and your rival will make $0.
a. Set up the extensive form of this game.
b. Should you introduce the new product?
c. How would your answer change if your rival has "promised" not to clone your product?
d. What would you do if patent law prevented your rival from cloning your product?
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Explain how many fish should a commercial fisherman try to catch a day. Should he catch as many as possible or return to dock before filling the boat with fish.
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hat is American's MRTS between K and L? MRTS between K and F. Should American try to ensure that all its MRTSs are equal. Explain what does American's production function exhibit constant, increasing, or decreasing returns to scale.
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