Joe is the owner of the 7-11 Mini Mart, Sam is the owner of the SuperAmerica Mini Mart, and together they are the only two gas stations in town. Currently, they both charge $3 per gallon, and each earns a profit of $1,000. If Joe cuts his price to $2.90 and Sam continues to charge $3, then Joe's profit will be $1,350, and Sam's profit will be $500. Similarly, if Sam cuts his price to $2.90 and Joe continues to charge $3, then Sam's profit will be $1,350, and Joe's profit will be $500. If Sam and Joe both cut their price to $2.90, then they will each earn a profit of $900. You may find it easier to answer the following questions if you fill in the payoff matrix below. 
width="383" />For Joe, keeping his price at $3 per gallon is a:
A. profit-maximizing strategy.
B. revenue-maximizing strategy.
C. dominant strategy.
D. dominated strategy.
Answer: D
You might also like to view...
Which of the following is a list of fixed inputs for a hospital?
A) bandages, casts, and other materials B) antibiotics, pain medication, and other prescription drugs C) the emergency room, intensive care unit, and other facilities D) the nurses, receptionists, and other employees E) the lobby, the doctors, and the electricity it uses
The monetary rule is the view of the:
A. Keynesians that monetary policy is most important. B. Monetarists that monetary policy is most important. C. Classical economists that monetary policy is most important. D. Monetarists that the Fed should expand the money supply at a constant rate.