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Use the following information to answer Problems 8, 9, and 10. Intel and AMD have two...

Use the following information to answer Problems 8, 9, and 10.

Intel and AMD have two pricing strategies: Set a high (monopoly) price or set a low (competitive) price. Suppose that if they both set a competitive price, economic profit for both is zero. If both set a monopoly price, Intel makes an economic profit of $860 million and AMD of $140 million. If Intel sets a low price and AMD sets a high price, Intel makes an economic profit of $100 million and AMD incurs an economic loss of $10 million; if Intel sets a high price and AMD sets a low price, Intel incurs an economic loss of $100 million and AMD makes an economic profit of $10 million.

  1. Create the payoff matrix for this game.
  1. What is the equilibrium of this game?

  1. Is the equilibrium efficient? Is this game a prisoners’ dilemma?
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