Suppose that McDonalds and Yum Brands are the sole producers of a quadruple-decker chicken and hamburger sandwich. The two firms currently charge the same price for their products. If neither firm reduces the price of its quadruple-decker chicken and hamburger sandwich, each firm earns $40 million in profit. If both firms reduce their prices, then each firm will earn $9 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
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