Suppose that Journeyman and Makers Mark are the sole producers of a super-smooth bourbon. The two firms currently charge the same price for their products. If neither firm reduces the price of its super-smooth bourbon, each firm will earn \$30 million in profit. If both firms reduce their prices, then each firm will earn \$8 million in profit. If one firm reduces its price and the other does not, then the firm that reduces price will earn a profit of \$70 million while the other firm will earn a profit of \$2 million.
Assuming that collusion is not a possibility, the Nash equilibrium occurs when
Choose one:
A. Makers Mark will reduce its price and Journeyman will maintain its current price.
B. Journeyman will reduce its price and Makers Mark will maintain its current price.
C. both firms will reduce their price.
D. both firms will maintain their current price.
