There are just two grocery stores in a small town somewhere-Sarah's Super Supermarket and Mike's Mighty...
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There are just two grocery stores in a small town somewhere-Sarah's Super Supermarket and Mike's Mighty Mart. Currently, each firm shares the market equally and each earns an economic profit of $375 per day by charging low (competitive) prices. The two firms believe that if they work together, then they can both charge high prices and earn $500 per day each. Sarah likes this idea, but she figures that if she secretly breaks the agreement and charges low prices, then she can earn $650 per day while Mike would earn just $150 per day. Mike has a similar strategy. A. Complete the payoff table below. Note: the first number in each part of the payoff table must show Sarah's payoff. Sarah's Super Supermarket Low Price High Price Low Price Mike's Mighty Märt High Price There are just two grocery stores in a small town somewhere-Sarah's Super Supermarket and Mike's Mighty Mart. Currently, each firm shares the market equally and each earns an economic profit of $375 per day by charging low (competitive) prices. The two firms believe that if they work together, then they can both charge high prices and earn $500 per day each. Sarah likes this idea, but she figures that if she secretly breaks the agreement and charges low prices, then she can earn $650 per day while Mike would earn just $150 per day. Mike has a similar strategy. A. Complete the payoff table below. Note: the first number in each part of the payoff table must show Sarah's payoff. Sarah's Super Supermarket Low Price High Price Low Price Mike's Mighty Märt High Price
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Mike Mart Low price High price Sarah supermarket Low price 260 650 High price 150 500 ... View the full answer
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