In the Little Town of Gas Pump, South Dakota, There

Multiple Choice

In the little town of Gas Pump, South Dakota, there are two gas stations across the street from each other, the East station and the West station.A local ordinance requires that they are permitted to change the price of gasoline only once a week at precisely 8:00a.m.on Monday and in 5 cent increments.For some time, the price of gasoline has been stable at $1.50 per gallon, but midweek, the price each station pays for gasoline changed to $1.44.Given the payoff matrix below, which of the following strategies is a pure strategy Nash equilibrium?

A) (cut, cut) , (hold, hold) , and (raise, raise)
B) (cut, cut) and (hold, hold)
C) (hold, hold) and (raise, raise)
D) (raise, raise)
E) No pure strategy Nash equilibrium exists.