Use the Following to Answer Question

question 53

Multiple Choice

Use the following to answer question:
Figure: Pricing Strategy in Cable TV Market II
-(Figure: Pricing Strategy in Cable TV Market II) Use Figure: Pricing Strategy in Cable TV Market II.Suppose that,after one month,the cable providers follow a tit-for-tat strategy.Eventually,they will achieve a tacit collusive equilibrium at which:

• A)both firms set a low price and each earns $90,000.
• B)both firms set a high price and each earns $100,000.
• C)CableNorth sets a high price and earns $80,000,and CableSouth sets a low price and earns $130,000.
• D)CableNorth sets a low price and earns $130,000,and CableSouth sets a high price and earns $80,000.

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Definitions:

Control

The ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

Contingent Liability

A potential obligation that may arise depending on the outcome of an uncertain future event, which is not confirmed at the date of the financial statements.

Fair Value

What would be pocketed from an asset sale or the price to offload a liability during a methodical engagement with market individuals on the day of measurement.

Present Obligation

A duty or responsibility to act or perform in a certain way.