The Payoff Table Below Depicts Price Competition Between Two Electronics

question 7

Essay

The payoff table below depicts price competition between two electronics stores.(Payoffs are weekly profits in thousands of dollars for each store. )
(a)Assuming they determine their strategies independently of one another,what are the stores' respective equilibrium strategies? Explain briefly.

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Definitions:

Economic Losses

Situations where total costs exceed total revenues, indicating that resources may be better utilized elsewhere.

Average Variable Cost

The total variable costs (costs that change with the level of output) of production divided by the quantity of output produced.

Short Run

A time period in which at least one input is fixed and cannot be changed by the firm, affecting its production decisions.

Purely Competitive Market

Another term for a perfectly competitive market, emphasizing its features like a large number of small firms and identical products.