A former employee of your firm was dismissed when it was suspected that she had stolen from the petty cash account. It could not be proven, but suspicions were strong enough that the firm decided to let her go. She has now applied at another firm, and listed your firm as a reference. What should you do? A) tell the prospective employer about your suspicions, or you might be held liable if she steels money from them and you didn't tell them
B) don't tell them about your suspicions; just give her a glowing reference
C) don't tell them about your suspicions; just give a "service" reference
D) any of these is an acceptable choice

1. consider a two-firm industry. firm 1 (the incumbent) chooses a level of output qı. firm 2 (the potential entrant) observes qı and then chooses its level of output q2. the demand for the product is p 100 q, where q is the total output sold by the two firms which equals qi +q2. assume that the marginal cost of each firm is zero. a) find the subgame perfect equilibrium levels of qi and q2 keeping in mind that firm 1 chooses qi first and firm 2 observes qi and chooses its q2. find the profits of the two firms-n1 and t2- in the subgame perfect equilibrium. how do these numbers differ from the cournot equilibrium? b) for what level of qi would firm 2 be deterred from entering? would a rational firm 1 have an incentive to choose this level of qi? which entry condition does this market have: blockaded, deterred, or accommodated? now suppose that firm 2 has to incur a fixed cost of entry, f> 0. c) for what values of f will entry be blockaded? d) find out the entry deterring level of q, denoted by q1', a expression for firm l's profit, when entry is deterred, as a function of f. for what values of f would firm 1 use an entry deterring strategy?