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4. (5 points) In the game depicted below, firms 1 and 2 must independently (no collusion) decide whether to charge high or low prices. Firm

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4. (5 points) In the game depicted below, firms 1 and 2 must independently (no collusion) decide whether to charge high or low prices. Firm 2 High Price Low Price Firm 1 High Price (10, 10) ( 5 , - 5 ) Low Price (-5, 5) (0, 0) (a) What is the Nash equilibrium for the above game? (b) If the firms were able to collude, what outcome would they settle on? (c) Is there any incentive for Firms 1 and 2 to cheat on the collusive outcome? Please explain

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