# Return to the Tudor-Ford or problem from Section 6.C, when Tudor’s low per-unit cost is 10. Let z be

Return to the Tudor-Ford or problem from Section 6.C,

when Tudor’s low per-unit cost is 10. Let z be the probability that Tudor

actually has a low per-unit cost.

(a) Rewrite the table in Figure 8.10 in terms of z.

(b) How many pure-strategy equilibria are there when z =

0? What type of equilibrium (separating, pooling, or semi separating) occurs

when z = 0? Explain.

(c) How many pure-strategy equilibria are there when z =

1? What type of equilibrium (separating, pooling, or semi separating) occurs

when z = 1? Explain.

(d) What is the lowest value of z such that there is a

pooling equilibrium?

(e) Explain intuitively why the pooling equilibrium

cannot occur when the value of z is too low.