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Question: big earth and district 13 are two producers of neodymium...

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Big Earth and District 13 are two producers of neodymium, a rare earth. If they agree to restrict output, each firm earns $100 million per year. If both firms expand output, each firm earns $50 million per year. If one firm restricts output and the other firm expands output, the firm that expands output earns $150 million per year and the other firm earns only $30 million per year. Assume that Big Earth and District 13 will compete infinitely, with each firm following a grim trigger strategy. Which of the following statements is TRUE? If d = 0.50, Big Earth is indifferent between agreeing to restrict output and expanding output. If d-0.75, Big Earth would be better off by expanding output. If d 0.90, Big Earth is indifferent between agreeing to restrict output and expanding output. If d 0.40, Big Earth would be better off restricting output.

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