Suppose a town only has two petrol stations, United and BP. Each could choose to charge a high price or low price, as shown in the matrix below.

		BP
	BP charges a low price:	BP charges a high price:
United	United charges a low price:	BP has low profit; United has low profit	BP has no profit; United has high profit
United charges a high price:	BP has high profit; United has no profit	BP has average profit; United has average profit

(a) What is the dominant strategy (i.e. a Nash equilibrium) for the above matrix? Explain briefly.

(b) If the two petrol stations could collude, what would be the likely strategy? Explain briefly.

(c) (This sub-question is not related to the above questions.) Briefly explain the principles of the 'kinked' demand curve by using an example such as pricing a product by the two supermarket giants.