Consider the Following Game in Which Two Firms Decide How

question 57

Multiple Choice

Consider the following game in which two firms decide how much of a homogeneous good to produce. The annual profit payoffs for each firm are stated in the cell of the game matrix, and Firm A's payoffs appear first in the payoff pairs:

What are the dominant strategies in this game?

• A) Both firms produce low levels of output
• B) Both firms produce high levels of output
• C) Firm A's dominant strategy is to produce low levels of output, but Firm B does not have a dominant strategy.
• D) Firm B's dominant strategy is to produce low levels of output, but Firm A does not have a dominant strategy.
• E) Neither firm has a dominant strategy

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Definitions:

Minds of Adults

The cognitive processes, understanding, and psychological aspects characteristic of adult individuals.

Market Segmentation

The process of dividing a broad consumer or business market into sub-groups of consumers or segments based on shared characteristics.

Process

A series of actions or steps taken in order to achieve a particular end.

Mass Customization

A strategy that combines the low costs of mass production with the flexibility of individual customization.