Jack and Jill are the two suppliers of water in a small town. Each producer has two choices available: either pump the low quantity of 30 gallons of water or pump the higher quantity of 40 gallons of water. Here are the possible outcomes to this duopolistic market: If both producers pump 40 gallons, each get a profit of $1,600. If both producers pump 30 gallons, each get a profit of $1,800. If Jack pumps 30 gallons and Jill pumps 40 gallons, Jack gets $1,500 of profit and Jill gets $2,000 profit. If Jill pumps 30 gallons and Jack pumps 40 gallons, Jack gets $2,000 of profit and Jill gets $1,500 profit.
a. Find the Nash equilibrium of this game.
b. Under what conditions would it possible for both producers to cooperate with each other?
