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Westinghouse and General Electric are competing on the newest version of clothes washer and dryer combinations. Two pricing strategies exist: price high or price low. The profit from each of the four possible combinations of decisions is given in the following payoff matrix:
a) Which strategy offers both Westinghouse and General Electric the best financial outcome?
b) Does either firm have a dominant strategy? If yes, which firm and what strategy?
c) The Nash equilibrium is for Westinghouse to set its price at _______ and earn a profit of _______ and for General Electric to set its price at ________ and earn a profit of _________.
d) Why do we see that the strategy that results is not the strategy that offers both players the best financial outcome?
There is some information you are given, and on the basis of the information, you are asked to make a decision. Now here are some definitions
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