Use the Following to Answer Questions: Table: Christie' and Sotheby's

question 174

Multiple Choice

Use the following to answer questions: Table: Christie' and Sotheby's $$\begin{array} { | l | l | l | l | } \hline & & \text { Sotheby's Strategies } \\\hline & & \text { High Commission } & \text { Low Commission } \\\hline \text { Christie's } & \text { High Commission } & \text { \$4 million, \$4 million } & \text { \$2 million, \$6 million } \\\hline \text { Strategies } & \text { Low Commission } & \text { \$6 million, \$2 million } & \text { \$3 million, \$3 million } \\\hline\end{array}$$
-(Table: Christie' and Sotheby's) Each cell of this table presents the revenues earned by the auction houses, Christie's and Sotheby's. Revenues are based on the type of commission each firm charges its clients, as well as what commission the other charges. Christie's revenues are listed first in each cell, then Sotheby's. Christie's dominant strategy is ______ commission and Sotheby's dominant strategy is ______ commission.

• A) high; high
• B) high; low
• C) low; high
• D) low; low

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Definitions:

Competitive Labor Market

A market where there are many employers and job seekers, and the wages are determined by supply and demand for labor.

Marginal Revenue Product

The additional revenue a firm generates by employing one more unit of input, like labor, in the production of goods or services.

Marginal Product

The additional output that is produced by adding one more unit of a particular input while keeping other inputs constant.

Perfect Competitor

A theoretical market structure where many firms sell identical products, entry and exit are easy, and no single buyer or seller can influence market price.