10. Store A and Store B are the only two flower shops in a small town. The demand for a dozen roses is P = 25

= Q. Neither Store A nor Store B has any fixed costs, whereas the marginal cost of Store A is constant at

$3, and the marginal cost of Store B is constant at $5.

Each seller can sell either 5 dozen or 10 dozen roses, and they meet only once in this market.

a. Create the payoff matrix. Show your calculations and explain verbally as necessary.

b. Find the Nash equilibrium or equilibria. Explain verbally.

c. If there are multiple equilibria, which equilibrium do you think is most likely to occur and why?