Table $14-2$ shows the payoff matrix for Walmart and Target from every combination of pricing strategies for the popular PlayStation $4.$ At the start of the game each firm charges a low price and each earns a profit of $$7,000.$

Refer to Table $14-2.$ Is the current strategy in which each firm charges the low price and earns a profit of $$7,000$ a Nash equilibrium? If not, why and what is the Nash equilibrium?

No$,$ it is not a Nash equilibrium because each firm can do better by charging the high price. The Nash equilibrium occurs when each firm charges the high price and earns a profit of $$10,000.$

No$,$ the current situation is not a Nash equilibrium: it is a dominant strategy equilibrium. There is no Nash equilibrium in this game.

No$,$ the current situation is not a Nash equilibrium. The Nash equilibrium for each firm is to have the other charge a high price and for the firm in question charge a low price.

Yes, the current situation is a Nash equilibrium.