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Use the following information for Questions ?, B and 9. Two fIrrnS are competing in a one-ti me market where each rm needa to Simultaneoualy
Use the following information for Questions ?, B and 9. Two fIrrnS are competing in a one-ti me market where each rm needa to Simultaneoualy decide whether to charge a high price or a low price.The payoff matrix is below [e.g.. if Firm it charges. a low price and Firm 2 chargea a high price. then Firm 1'5 payoff i5 EU and Firm 2'5 payoff is -5C|I. Hiahprice High Price 5CJ, 5E] 'li 10 What would the flrma' payoffs be if they agree to cooperate with each other and the agreement is enforceable He, no cheating}? Question 8 1 pts For the game described in Question 7: Suppose both firms agree to charge a high price. If Firm 1 cheats and charges a low price, how much would its payoff increase? O 60. O 100. O 40. OO. O 10
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