What will be each firm respective profit levels

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Reference no: EM13825394

Problem-
Consider the following pay-off matrix (Numbers in the matrix reflect their respective profit levels) for two gas stations.

	Gas station A
Gas Station B	High price	Low price
High price	200,000 AED; 200, 000 AED	50,000 AED; 400,000 AED;
Low price	400,000 AED; 50,000 AED	80,000 AED; 80,000 AED;

If each firm follows their dominant strategy, then what will be their respective profit levels? And if they collude then what is their new profit level?

Additional Information-

The problem belongs to Economics, mainly to Micro-economics and it is discuss about a pay-off matrix for two gas stations with dominant strategy and calculate profit levels.

Reference no: EM13825394

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