Use the Table Below to Answer the Following Question

question 77

Multiple Choice

Use the table below to answer the following question.
Table 14.2.3
-Refer to Table 14.2.3.Store X and Store Y must decide whether or not to lower their prices.The table gives the economic profit made by Store X and Store Y.Which one of the following observations is correct?

• A)Both Store X and Store Y have a dominant strategy of raising their prices.
• B)If Store X lowers its prices and Store Y does not,Store X will earn a $20 profit.
• C)If Store Y lowers its prices,Store X will be better off not lowering its prices.
• D)Both Store X and Store Y would be better off if they could collude and agree to not lower prices.
• E)Both Store X and Store Y have a dominant strategy of lowering their prices.

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Definitions:

Real Output

The quantity of goods and services produced in an economy, adjusted for inflation, reflecting the actual productivity.

Expected Inflation Rate

The anticipated rate at which the general level of prices for goods and services will rise over a period.

Velocity of Money

The rate at which money circulates in the economy, typically measured as the ratio of nominal GDP to the money supply.

Actual Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling, as measured over a specific period of time.