5. (10 points) The following provides information for a one-shot game.

Firm B

Low Price High Price

Low Price (2, 2) (10, 8)

Firm A High Price (8, 10) (15, 15)

The first number in brackets is Firm A's return, and the second number in brackets is Firm B's return.

Firm A and Firm B operate in a duopoly in which you and a rival must simultaneously decide what price to advertise in the weekly newspaper.

(a) Does Firm A have a dominant strategy? If yes, what is that dominant strategy?

(b) Does Firm B have a dominant strategy? If yes, what is that dominant strategy?

(c) Is there a Nash equilibrium (or Nash equilibriums) for the above game? If yes, what is thatNash equilibrium?

(d) What will the collusive outcome be for the above game?

(e) If a collusive outcome is reached, will either firm have an incentive to cheat on theagreement? Please explain.