Aflight route is served by american airlines (aa) and southwest airlines (sw). suppose american is the industry leader american will decide whether to raise airfares, and then southwest will decide whether to match the price increase. what is the nash equilibrium of the game?
a. the game does not have a nash equilibrium.
b. american will leave fares unchanged and southwest will leave fares unchanged
c. american will leave fares unchanged and southwest will raise fares
d. american will raise fares and then southwest will leave fares unchanged
e. american will raise fares and then southwest will raise fares.

Haley photocopying purchases a paper from an out-of-state vendor. average weekly demand for paper is 150 cartons per week for which haley pays $15 per carton. in bound shipments from the vendor average 1000 cartoons with an average lead time of 3 weeks. haley operates 52 weeks per year; it carries a 4-week supply of inventory as safety stock and no anticipation inventory. the vendor has recently announced that they will be building a faculty near haley photocopying that will reduce lead time to one week. further, they will be able to reduce shipments to 200 cartons. haley believes that they will be able to reduce safety stock to a 1-week supply. what impact will these changes make to haley’s average inventory level and its average aggregated inventory value?