Ann Taylor and Gap are two clothing companies that must decide on ...

[bucstennis@aim.com]

Ann Taylor and Gap are two clothing companies that must decide on the leading color palette for next season. Their sales depend on the choice of color they make as well as the choice their competitor makes.
 
  Their sales are summarized in the payoff matrix above. Using the payoff matrix A) the only Nash Equilibrium is for both companies to choose pink.
  B) the only Nash Equilibrium is for both companies to choose orange.
  C) the Nash Equilibrium is for one company to choose pink while the other company chooses orange.
  D) there are two Nash Equilibria: either both companies choose pink or both choose orange.

Question 2

What happens to the aggregate demand curve in the United States if the exchange rate increases so that U.S.-made products become more expensive?
 
  What will be an ideal response?

[Fayaz00962]

Answer to Question 1

A

Answer to Question 2

Net exports decrease so U.S. aggregate demand decreases.

[bucstennis@aim.com]

Excellent

[olderstudent]

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