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E Consider two stores (Mitre 10 and Bunnings) serving a small community: First, Bunnings will choose whether to charge high prices or low prices, Mitre

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E Consider two stores (Mitre 10 and Bunnings) serving a small community: First, Bunnings will choose whether to charge high prices or low prices, Mitre 10 then will observe Bunnings' decision and then choose their pricing strategy .If they both choose High, each earns $10 million .If they both choose Low, each earns $8 million .If one chooses High and the other chooses Low. the one that chose High earns $6 million and the other earns $14 million. Based on the game tree (shown as follows), the best solution for the game is Low price Low price. (10,10) High Mitre 10 High Low (6,14) High (14,6) Bunnings Low Mitre 10 Low (8,8) a) Please transform this sequential game into a simultaneous game and find the equilibrium outcome(s), assuming the two firms make their pricing decisions at the same time. (Hint: you need to draw the payoff matrix and find the equilibrium outcome(s)). AAT BI (>

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