Question A Suppose each of two firms must simultaneously choose to set either a high price (H) or a low price (L). The normal- form representation of the game is:

Firm 2 Firm 1 H L H 5, 5 -5, 10 L 10, -5 0, 0 where profits are reported in the cells (firm 1's profits listed first). What is the Nash Equilibrium of this game?

Question 6 options:

{H, H}

{L, L}

{L, H}

{H, L}

Question B You are the sole domestic producer of the generic antidepressant Sensitrum. Your marginal cost is $2 per dose. Demand is given by Q = 400 - 50p (Q in millions of doses, p in $). There is a second producer in India whose marginal cost is INR 145 (currency in Indian Rubies, INR). Firms set prices simultaneously. What is your (approximate) equilibrium profit at the current exchange rate of INR 48 / US?

Question 7 options:

$120m

$254m

$0

$202m