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Suppose that Firm 1 produces cell phones that can be used to send emails and connect with the internet. Firm 2 produces cell phones
Suppose that Firm 1 produces cell phones that can be used to send emails and connect with the internet. Firm 2 produces cell phones that can only make phone calls. The payoff matrix to the right shows that as long as Firm 1 chooses a high price for its phones, both firms can make a good deal of money. Even if Firm 2 chooses a low price for its phone, many people will still buy Firm 1's phones because they can do so many other things. This game's Nash equilibrium is for O A. Firm 1 to choose the high price and for Firm 2 to choose the high price. OB. Firm 1 to choose the low price and for Firm 2 to choose the low price. O C. Firm 1 to choose the high price and for Firm 2 to choose the low price. O D. Firm 1 to choose the low price and for Firm 2 to choose the high price. E. none of the above. Firm 1 High Low Firm 2 High 400, 320 80,0 Low 320, 400 40, 80
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