Firm 2 will switch to Low if the payoff to playing High is less that 6, the payoff it earns for playing Low when Firm 1 plays Low. Thus we can rule out answers a, b, and c, (3, 4, and 5) respectively since all these values are below 6. However if X = 7 Firm 2 will stay with High and we have a Nash equilibrium.
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