b) Does your answer to part (a) help you figure out what the other
player should do? What is the Nash equilibrium? Is there only
one?
c) Big Brew threatens Little Kona by saying, "If you enter, we're
going to set a low price, so you had better stay out." Do you
think Little Kona should believe the threat? Why or why not?
d) If the two firms could collude and agree on how to split the total
profits, what outcome would they pick?
Fig: 1