Consider the Following Payoff Matrix Facing Two Firms Selling the Same

question 40

Multiple Choice

Consider the following payoff matrix facing two firms selling the same product in the same market. They must choose whether to price the good at a high or low price. $$\begin{array} { c } \quad \quad \quad \quad \quad \quad \quad { \text { COMPANY B } } \\\begin{array} { | l | l | c | c | } \hline & & \text { Low Price } & \text { High Price } \\\hline \text { COMPANY A } & \text { Low Price } & \text { A: } 2 , \text { B: } 2 & \text { A: } 4 , \text { B: } 1 \\\hline & \text { High Price } & \text { A: } 1 , \text { B: } 3 & \text { A: } 6 , \text { B: } 2 \\\hline\end{array}\end{array}$$ Given this information:

• A)A has a dominant strategy but B does not.
• B)B has a dominant strategy but A does not.
• C)both A and B have dominant strategies.
• D)neither A nor B has a dominant strategy.