A couple of years ago, in a move that surprised some industry watchers, Starbucks cut the price of bags of coffee sold in grocery stores by 10% (equivalent to about $1 per bag). Starbucks acknowledges that it will lose profit in the short run, but believes it will gain more grocery store customers in the long run. Starbucks and their closest competitor, Dunkin Donuts, estimate the following payoff matrix for their pricing strategies for the next quarter.

Note: Dunkin' Donuts payoffs are the first number in the cell; Starbucks payoffs are the second number in the cell in the cell.

		Starbucks
		Price High	Price Low
Dunkin Dounts	Price High	80, 90	75, 110
Price Low	90, 80	65, 90

1. (3 points) What is the Nash Equilibrium of this game?
2. (2 points) Does Starbucks have dominant pricing strategy, given these predicted payoffs? Does Dunkin' Donuts have a dominant pricing strategy, given these payoffs? Explain.
3. (2 points) Is this game an example of a prisoner's dilemma? Why or why not?