This question is based on "Game theory".

Khalid and Oumaima own the only coffee shops in town. Each must choose between a low price for Matcha and a high price. The annual economic profit from each strategy is indicated in the table. The profits are shown as (Khalid, Oumaima) in each cell.

		Oumaima
		Low Price	High Price
Khalid	Low Price	(160, 160)	(700, 150)
High Price	(150, 300)	(600, 600)

1. What is the Nash Equlibrium? (5points)
2. Is the Nash Equlibrium the most optimal strategy? (3 points)
3. Is there dominant strategy for Khalid and Oumaima? (2 points)
4. If Khalid and Oumaima were going to be in business long term and would have several chances to set prices how would the Nash Equilibrium change? (3)
5. Using this example why is it difficult for Cartels to maintain cooperation (2)