In the Game Shown Below,firms 1 and 2 Must Independently

question 7

Multiple Choice

In the game shown below,firms 1 and 2 must independently decide whether to charge high or low prices. $\begin{array}{l}\quad\quad\quad\quad\quad\text { Firm Two }\\\text { Firm One }\begin{array}{|l|l|l|}\hline & \text { High Price } & \text { Low Price } \\\hline \text { High Price } & (10,10) & (5,-5) \\\hline \text { Low Price } & (5,-5) & (0,0) \\\hline\end{array}\end{array}$ Which of the following are the Nash equilibrium payoffs (each period) if the game is repeated 10 times?

• A) (0, 0)
• B) (5, -5)
• C) (-5, 5)
• D) (10, 10)

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Definitions:

Marked Down

A reduction in the original selling price of goods, often to clear old stock or boost sales.

Clearance Sale

A sale event to clear out inventory, often featuring significant reductions in prices to encourage quick sales.

Cost Price

The total cost incurred to produce or purchase an item before any markup or selling expenses are added.

Operating Expense

Expenditures that a business incurs through its normal business operations.