Use the following setup for the question.
Assume a simultaneous-move game.
-What is the best response of firm B,given firm A is charging a low price?
Definitions:
Opportunity Costs
The cost of an alternative that must be forgone to pursue a certain action. Put differently, the benefits you could have received by taking an alternative action.
WACC
Weighted Average Cost of Capital, the average rate of return a company is expected to pay to all its security holders, including equity and debt.
Calculate
The act of determining a value or amount by mathematical means, often to analyze financial or statistical data.
Borrowed
The act of receiving something, especially money, with the obligation to return it or its equivalent.
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