In a Shopping Mall There Are Two Tobacco Stores

Multiple Choice

In a Shopping Mall there are two tobacco stores. They each set a high price for their cigars, they each earn $50,000 a month. If they each set a low price, they each earn $25,000 a month. If one store sets a low price while the other sets a high price, the low- price store earns $70,000 while the
High- price store earns $10. Which of the following is a Nash equilibrium?

A) Both set a high price.
B) One firm sets a low price; the other high.
C) Both set a low price.
D) A mixed- strategy equilibrium.