Use the Following to Answer Question

question 133

Multiple Choice

Use the following to answer question:
Figure: Payoff Matrix for Jake and Zoe
-(Figure: Payoff Matrix for Jake and Zoe) Use Figure: Payoff Matrix for Jake and Zoe.Jake and Zoe are the only producers of slushies in their tourist town.Every week,each decides whether to price high or price low for the following week.The figure shows the profit per week earned by their two firms.Suppose the firms each decide to price high initially and adopt a tit-for-tat strategy for the following weeks.After a few weeks,Jake's weekly profit would be _____ and Zoe's weekly profit would be _____.

• A)$800;$800
• B)$1,000;$1,000
• C)$1,500;$200
• D)$200;$1,500

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Definitions:

Loss Averse

The psychological phenomenon where losses are perceived to be more significant than equivalent gains.

Mental Accounting

The process by which individuals categorize their money into different accounts based on subjective criteria.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Functional Risk

The potential for a product or service to fail to perform its intended function, causing inconvenience or loss to the user.