Consider the following information for a simultaneous move game: If you charge a low price (LP) and your rival charges a LP, you each will earn $5 million in profits. If both charge a high price (HP), each will each earn $10 million in profits. However, if one charge a LP and the other does not, the firm that charges a LP will earn $15 million and the other firm will earn $1 million. 1. If both firms plan to be in business for one-year, the Nash Equilibrium will be:a) For each firm charge LPb) For neither firm to charge LPc) For one firm to charge LP and the other HPd) None of the above.
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Home » Business » Consider the following information for a simultaneous move game: If you charge a low price (LP) and your rival charges a LP, you each will earn $5 million in profits. If both charge a high price (HP), each will each earn $10 million in profits.