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a) (1 points) Explain the concept of a dominant strategy. b) (2 points) Does Firm A have a dominant strategy? Explain. c) (2 points) Does

a) (1 points) Explain the concept of a dominant strategy.

b) (2 points) Does Firm A have a dominant strategy? Explain.

c) (2 points) Does Firm B have a dominant strategy? Explain.

d) (10 points) Find the Nash equilibrium of the game is the game is played simultanesously. Explain your reasoning.

e) (5 points) Assume that the game is played repeatedly (NOT sequentially), with both firms cooperating and playing "High Price". If the game is played for only 10 times, will this cooperation last? Explain.

f) (5 points) How would your answer to part (e) change if the game is played forever? Explain.

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Consider the following pricing game between two firms: Firm B Low Price High Price Firm A Low Price 10 : 10 100 ; -50 High Price -50 ; 100 50 ; 50

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