The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. For firm A,
A) setting a low price is the dominant strategy.
B) setting a high price is the dominant strategy.
C) setting a high price when firm B sets a high price, and setting a low price when firm B sets a low price is the dominant strategy.
D) setting a high price when firm B sets a low price, and setting a low price when firm B sets a high price is the dominant strategy.
A
You might also like to view...
Use the figure above to answer this question. Figure ________ shows a short-run equilibrium in good times because the firm makes a(n) ________
A) A; economic profit B) A; normal profit C) B; normal profit D) B; economic loss E) C; normal profit
You are in the market for a used 2016 Toyota Corolla. You know that half of the 2016 Corollas are lemons and half are peaches. If you could be assured that the Corolla you were buying was a peach, you would be willing to pay up to $12,000. On the other hand, you would only be willing to pay $4,000 for a lemon. You have no ability to discern whether any particular Corolla is a lemon or a peach. Sellers of Corollas, on the other hand, are likely to know whether their particular car is a lemon or a peach. Suppose sellers of lemons will sell their cars for $3,000 or more and peach sellers will be willing to sell their cars for $9,000 or more. Over time the price in the market for 2016 Corollas will
A. be between $3,000 and $12,000 and both lemons and peaches will be traded. B. be between $3,000 and $4,000 for lemons and only lemons will be traded. C. be between $9,000 and $12,000 and only peaches will be traded. D. be between $9,000 and $12,000 for peaches and between $3,000 and $4,000 for lemons and both lemons and peaches will be traded.