Question: PROBLEM 55 Suppose a small town has only two firms (firm] and firm 2) selling the same product. Each firm can either set a high

PROBLEM 55

Suppose a small town has only two firms (firm] and firm 2) selling the same product. Each firm can either set a high price (H) or a low price (L) for its product. The payoff matrix below displays the profits per day given the combination of prices for both firms. The first entry shows firm1's profits while the second entry shows the second firm's profits. The information displayed in the playoff matrix are known by both firms. Firm 2 High price Low Price High price $210; $220 S80; $260 Firm 1 Low Price $240; $160 $150; $140 2. Assuming that the two firms do not cooperate to set prices, what will be the profits of each firm

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