[Q: 13-2157417] Two firms are competing by choosing their prices simultaneously. Each firm can choose either a low price or a high price. The payoff matrix of their competition is depicted in the image. Mixed strategy Nash equilibrium: Firm 1 We can see from the payoff matrix that there are no pure strategy Nash equilibrium in this game because at least one firm would always have an incentive to change its behavior. From Nash's theorem, we know there must be at least one Nash equilibrium so there must be a mixed strategy Nash equilibrium for this game. Low Price High Price Question 1 (4 points): Calculate the probability of Firm 1 choosing 'Low Price" in the mixed strategy Nash equilibrium. Probability of Firm 1 choosing 'Low Price': ]. (Enter your answer as a decimal number, rounded to four decimal places) $18 $20 Question 2 (4 points): Calculate the probability of Firm 2 choosing 'Low Price" in the mixed strategy Nash equilibrium. Low Price Probability of Firm 2 choosing 'Low Price': ]. (Enter your answer as a decimal number, rounded to four decimal places) $38 $49 Alternative strategies: Firm 2 568 $38 The mixed strategies you found in Questions 1 and 2 are the only mixed strategy Nash equilibrium. We can see this by considering what would happen if either firm tried to play a different mixed strategy. High Price Question 3 and 4 (4 points each): Suppose that instead of Firm 2 playing the strategy you found above, it instead played a strategy where it chooses 'Low Price' 06.88% of the time. Determine the expected payoffs for Firm 1 if Firm 2 is playing this alternative strategy. $32 $64 Expected payoff for Firm 1 choosing "Low Price": |]. (Enter your answer as a decimal number, rounded to two decimal places) Expected payoff for Firm 1 choosing "High Price": ]. (Enter your answer as a decimal number, rounded to two decimal places) Question 5 (4 points): Based on the expected payoffs you found in Questions 3 and 4. what strategy would Firm 1 start playing if Firm 2 is playing 'Low Price' 98.88% of the time? O A. A pure strategy in which Firm 1 plays 'Low Price' 100% of the time O B. Firm 1 would not change its behavior away from what it plays in the mixed strategy Nash equilibrium O C. A pure strategy in which Firm 1 plays 'High Price' 100% of the time