The Following Matrix Shows the Pricing Strategies and Resultant Profits

question 7

Multiple Choice

The following matrix shows the pricing strategies and resultant profits (in thousands of dollars) for two profit-maximizing firms.
Table 9-1

-Refer to Table 9-1.If Firm A sets a high price,Firm B will _____.

• A)also set a high price
• B)earn a profit of $35,000
• C)follow the low-price strategy
• D)earn a profit of $30,000
• E)earn a lower profit than firm A

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Definitions:

Representativeness Heuristic

A cognitive shortcut where individuals assess the likelihood of an event based on how closely it resembles their mental stereotypes or categories.

Previously Existing Value

The worth or importance of something that was recognized or established before the current situation.

Framing Error

A mistake made when the context or way in which information is presented leads to incorrect conclusions or decisions.

Positive Or Negative Context

The environment or circumstances that can influence the interpretation or outcome of an action or decision as favorable or unfavorable.