Walmart and Target Are the Only Stores in a Remote

question 2

Multiple Choice

Walmart and Target are the only stores in a remote town that currently stock and sell the PlayStation 5 video game console.Managers at both stores are simultaneously deciding whether to charge a price of $1,000 or $1,500 for each console.If both stores charge $1,000,they earn a profit of $100,000 each.If both stores charge $1,500,they earn a profit of $200,000 each.If one store charges $1,000 and the other store charges $1,500,the store that charges $1,000 earns a profit of $250,000 and the firm that charges $1,500 earns a profit of $50,000.If Walmart and Target ________,they can both charge $1,500 and earn the highest combined profit available.

• A) collude with each other
• B) privately undercut each other after making an agreement
• C) engage in spirited price competition
• D) compete with each other only with regard to quantity and not price
• E) compete with each other only with regard to price and not quantity

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Definitions:

Stroboscopic Movement

The illusion of motion created when a series of static images is presented in rapid succession.

Linear Perspective

A depth cue that refers to the tendency for parallel lines to appear to converge as they recede into the distance.

Briefly Flashed

A term describing something shown or displayed for a very short period of time.

Monocular Depth Cue

A monocular depth cue is a visual information piece that allows a person to judge depth using the input from just one eye.