Two firms, Boomburgs and ABC X-Plode, both sell the same fireworks bundle. If they sell their fireworks at the manufacturer's suggested retail price (MSRP), they both sell 100 units a day. Each pays $8 per unit sold to the wholesaler in order to stock its shelves. If either firm sells below MSRP while the other sells at MSRP, the firm with the lower price sells 175 units a day and the firm charging MSRP sells only 50.
If both firms sell below MSRP, then each firm sells 125 units a day.
If MSRP is $16 and the below MSRP price is $12, calculate the following payoffs:
Profit for ABC X-Plode when both firms charge MSRP: $
Profit for ABC X-Plode when it charges MSRP but Boomburgs charges below MSRP: $
Profit for ABC X-Plode when it charges below MSRP but Boomburgs charges MSRP: $
Profit for ABC X-Plode when both firms charge below MSRP: $