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Question: table 1616 consider a small town that has two grocery...

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Table 16-16

Consider a small town that has two grocery stores from which residents can choose to buy a gallon of milk. The store owners each must make a decision to set a high milk price or a low milk price. The payoff table, showing profit per week, is provided below. The profit in each cell is shown as (Store 1, Store 2).

Store 2

Low Price

High Price

Store 1

Low Price

(500, 500)

(800, 100)

High Price

(100, 800)

(650, 650)



Refer to Table 16-16. If grocery store 1 sets a high price, what price should grocery store 2 set? And what will grocery store 2's payoff equal?

Low price, $800
Low price, $500
High price, $650
High price, $100
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