Exhibit 9-4  Two-Firm Payoff Matrix Suppose Costs Are Identical for the Two

Exhibit 9-4  Two-Firm Payoff Matrix Suppose costs are identical for the two firms in Exhibit 9-4. Each firm assumes without formal agreement that if it sets the high price its rival will not charge a lower price. Under these "tit-for-tat" conditions, equilibrium will be established by:

A) Beta Co. charging $1,000 and Alpha Co. charging $1,000.
B) Beta Co. charging $1,000 and Alpha Co. charging $500.
C) Beta Co. charging $500 and Alpha Co. charging $500.
D) Beta Co. charging $500 and Alpha Co. charging $1,000.

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