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Could someone please help me with this question I am struggling to understand this concept, thank you. Q3) Two firms, Firm 1 and Firm 2

Could someone please help me with this question I am struggling to understand this concept, thank you.

Q3)

Two firms, Firm 1 and Firm 2 are considering whether to enter a market and if so, whether to charge a high price ($15) or a low price ($5).

Hence each firm needs to choose from the following three strategies:

Not enter (N), Enter and charge a high price (E - H), or Enter and charge a low price (E - L)

A firm incurs some fixed cost for entering the market which is as follows:

The cost of entry is $200 for Firm 1 and $210 for Firm 2.

In addition to the above fixed cost, the average variable cost per unit of output sold is $3.

The quantity of output each firm is able to sell is as per the following table.

image text in transcribed
Firm 2 N E-H E-L Firm 1 N 0, 0 0, 30 0, 40 E-H 30, 0 15, 15 10, 30 E-L 40, 0 30, 10 20, 20

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