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Burger King and Mac Donald's Are Situated on Opposite Corners

Question 46

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Burger King and Mac Donald's are situated on opposite corners of a downtown intersection. Burger King and Mac Donald's compete on the basis of the prices they set for their burger, fry, and soda combination meals. Every Monday, Burger King and Mac Donald's simultaneously choose their combo meal prices, which will remain in effect for the rest of the week.
Burger King and MacDonald's consider only two possible prices: a low price of $3.50 or a high price of $4.50 for their combination meals. The weekly profit from each of the four possible combinations of decisions are given in the following table:
Burger King and Mac Donald's are situated on opposite corners of a downtown intersection. Burger King and Mac Donald's compete on the basis of the prices they set for their burger, fry, and soda combination meals. Every Monday, Burger King and Mac Donald's simultaneously choose their combo meal prices, which will remain in effect for the rest of the week.  Burger King and MacDonald's consider only two possible prices: a low price of $3.50 or a high price of $4.50 for their combination meals. The weekly profit from each of the four possible combinations of decisions are given in the following table:    -Burger King _____________ (can, cannot) credibly threaten to punish MacDonald's with a retaliatory price cut.
-Burger King _____________ (can, cannot) credibly threaten to punish MacDonald's with a retaliatory price cut.

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