The Brooks Appliance Store and the Lefingwell Appliance Store (both are located in the same city) each sell an identical washer-dryer. The owner of each store considered offering the washer-dryer for $700, but decided on a price of $500. If this is a Nash equilibrium we can conclude that
A) each store owner feared charging the higher price would result in being undercut by the other store charging the lower price.
B) the owners of the stores feared that charging $700 could be used as evidence of collusion.
C) charging $500 was the most profitable strategy for each store, regardless of what price was charged by the other store.
D) the stores were less concerned about making a profit from the washer-dryers than they were with attracting customers who would also buy other appliances.
Correct Answer:
Verified
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