Use the Following to Answer Questions 26-28

question 65

Multiple Choice

Use the following to answer questions 26-28:
Table 12.16
-(Table 12.16) The payoffs represent profits in thousands of dollars. Suppose that two firms are playing an infinitely repeated game. In period 6, Firm B decides it will no longer cooperate with Firm A. If Firm A is using a grim trigger strategy, Firm A will choose:

• A) a low price in period 7 and all future periods.
• B) a low price in period 7 and a high price in all future periods.
• C) to set price below marginal cost and drive Firm B out of the market.
• D) to maintain a high price in all future periods.

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Definitions:

Constant

A situation or variable in economics that does not change, or a fixed quantity within a particular analysis.

Infinite

A concept or quantity that has no end or limit, often used in mathematics, physics, and discussing concepts with no bounds.

Positive

In economics, it often refers to statements or propositions that can be tested and validated against real-world data, as opposed to normative, which are value-based.

Infinite

A term used to describe a quantity without bounds or end, often used in mathematics and physics to describe an unquantifiably large magnitude.