Given the table below

	Company XYZ's Possible Responses
Company ABC's Action	Charge high Prices	Charge low Prices
Charge high Prices	Profit gain/loss=$0	Profit loss=$5,000
Charge low Prices	Profit gain=$50,000	Profit loss=$500

a) If the probability of rivals matching a price reduction is 90 percent, what is the expected payoff for a price cut by Company ABC?

b) If the probability of rivals reducing price when ABC charges higher price is 20%, what is the expected payoff of charging high price?

c) Based on your answers to (a) and (b), what should be the price strategy for ABC?