Finding dominant strategies is often a very effective way of analyzing a game. Consider the following game: Microsoft and Apple are the two firms in the market for operating systems. Each firm has two strategies: charge a high price or charge a low price.

a. What (if any) is the dominant strategy for each firm?
b. Is there a Nash equilibrium? Briefly explain.

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Apple High Low Microsoft earns Microsoft earns $1 billion High $10 billion Apple earns $6 billion Apple eams $6 billion Microsoft Microsoft earns $4 billion Microsoft earns $8 billion Low Apple eams $2 billion Apple eams $3 billion