Based on the payoff matrix below:

Firm 2
Lower Prices	Do Not Lower Prices
Firm 1	Lower Prices	Firm 1: $1000 Profit Firm 2: $1000 Profit	Firm 1: $5000 Profit Firm 2: $0 Profit
	Do Not Lower Prices	Firm 1: $0 Profit Firm 2: $3000 Profit	Firm 1: $2000 Profit Firm 2: $2000 Profit

(a) If firm 1 lowers it price, what will firm 2 choose to do?

(b) If firm 2 lowers it price, what will firm 2 choose to do?

(c) Of the four outcomes on this payoff matrix, which outcome is likeliest to occur?

(d) Is your answer to the previous question the best outcome for both firms? Why will it be difficult for these firms to arrive at the best mutual outcome?