will make $500 per month profit thereafter. Assume that, once a gr his or her lease will be taken by some other merchant (not a grocer), so he or she will not be able to reopen a grocery store in this block, even if the other grocer also quits. Each grocer wants to maximize the expected discounted average value of his or her monthly profits, using a discount factor per month of 8=99 a. Find an equilibrium of this situation in which both grocers randomize between staying and quitting every month until at least one grocer quits. Is this the only equilibrium of this b. Suppose now that grocer 1 has a slightly larger store than grocer 2. As long as both ores remain in business, grocer 1 loses $1, 200 per month, and grocer 2 loses $900 per month If grocer 1 had the only grocery store on the block, she would earn $700 profit per month If grocer 2 had the only grocery store on the block, he would earn $400 per month. Find an equilibrium of this situation in which both grocers randomize between staying and quitting every month, until somebody actually quits. In this equilibrium, which grocer is more likely to quit first? 4. From Or:148.1.152.1.153.2will make $500 per month profit thereafter. Assume that, once a grocer quits, his or her lease will be taken by some other merchant (not a grocer), so he or she will not be able to reopen a grocery store in this block, even if the other grocer also quits. Each grocer wants to maximize the expected discounted average value of his or her monthly profits, using a discount factor per month of δ = .99. a. Find an equilibrium of this situation in which both grocers randomize between staying and quitting every month until at least one grocer quits. Is this the only equilibrium of this game? b. Suppose now that grocer 1 has a slightly larger store than grocer 2. As long as both stores remain in business, grocer 1 loses $1,200 per month, and grocer 2 loses $900 per month. If grocer 1 had the only grocery store on the block, she would earn $700 profit per month. If grocer 2 had the only grocery store on the block, he would earn $400 per month. Find an equilibrium of this situation in which both grocers randomize between staying and quitting every month, until somebody actually quits. In this equilibrium, which grocer is more likely to quit first? 4. From OR: 148.1, 152.1, 153.2 2