Question: Problem 5 (30 Points) Two companies are selling the same product. They both need to decide if they will go to the retail stores or

Problem 5 (30 Points) Two companies are selling

Problem 5 (30 Points) Two companies are selling the same product. They both need to decide if they will go to the retail stores or if they will only be wholesale. The cost per unit incurred in making the product is $5 for both company A and B. If company A sells the product in retail stores, the selling price will be $15 if company B also chooses retail and the price will be $19 if company B chooses wholesale. If company A chooses to sell the product in wholesale stores, the price would be $20 if company B chooses retail and $17 if company B chooses wholesale. Now, if company B sells the product in retail stores, their selling price will be $20 if company A chooses retail and the price will be $25 if company A chooses wholesale. If company B sells the product in wholesale stores, the price will be $23 if company A chooses retail and the price will be $15 if company A chooses wholesale. a. Construct the payoff matrix based on unit profit. (10 points) Hint: Profit= Selling Price- Cost b. Solve the game graphically or by solving the system of equations. (10 points) C. What is the expected value for company A? What is the expected value for company B? (10 points)

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