Question

(Table) HH Gregg and Best Buy are competing for sales for their new GPS devices. Each firm has a pricing strategy of either a high price or a low price. Profits for each store are listed in the payoff boxes. Based on the table, the Nash equilibrium for this game is:

a	High, Low = (30, 120).
b	High, High = (100, 100).
c	Low, High = (120, 30).
d	Low, Low = (50, 50).

Answer 1

		Best Buy
		High	Low
HH Gregg	High	100,100	30,120
	Low	120,30	50,50

When HH Gregg chooses high price, then Best Buy has more pay off in charging Low .

And When HH Gregg chooses Low price, then Best buy has more pay off in charging Low.

Similarly, when Best Buy chooses High price , then HH Gregg has more pay off in charging Low.

And when Best buy chooses Low price, then HH Gregg has more pay off in charging Low.

By seeing the best responses, Nash equilibrium = (Low, Low). Hence, option(D) is correct.