In a competitive market, if Firm A chooses to set a high price while Firm B sets a low price, which of the following scenarios best represents the relationship between their strategies in terms of Nash Equilibrium? Firm A : Firm B :: High Price : ?

In a competitive market, when Firm A sets a high price and Firm B sets a low price, we can think about how each firm makes decisions based on what the other does. If Firm B’s low price attracts more customers, Firm A might end up losing sales because consumers prefer the cheaper option. In a Nash Equilibrium, each firm makes the best choice they can, given the choice of the other firm. If Firm A realizes that a high price leads to fewer sales due to Firm B's low price, it may decide to lower its price as well, which means the best response for Firm B is to keep its low price. Thus, the relationship can be described as Firm A : Firm B :: High Price : Low Price, where each firm’s strategy depends on and reacts to the other’s pricing.