Business, 06.05.2021 19:40 cxttiemsp021

Scenario: Two factories dump their waste in a river. This has led to the contamination of the water which is also used in the production process. The matrix below shows the profits of the two firms based on their respective decisions to dump their waste into the river. Note that each firm's choice affects the other firm's profit. The first number listed in each cell is the payoff to the row player and the second number listed is the payoff to the column player. Firm 2
Dumps Does not Dump
Firm 1 Dumps 30 100
30 25
Does not Dump 25 75
100 75

What is the equilibrium outcome in this case?
a. Firm 2 will dump its waste into the river, and Firm 1 will not dump its waste.
b. Both firms will dump their waste into the river.
c. Neither of the firms will dump its waste into the river.
d. Firm 1 will dump its waste into the river, and Firm 2 will not dump its waste.

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Scenario: Two factories dump their waste in a river. This has led to the contamination of the water...

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