Table 16-4 In the Following Duopoly Game, the Two Firms Can Either

question 40

Multiple Choice

Table 16-4
In the following duopoly game, the two firms can either set the price of their product high or low. In this market, customers are very price sensitive: when one firm sets a low price it steals the majority of customers from its competitor. The game is represented in the table below.

-Refer to Table 16-4. Profit for each firm would be maximised if:

• A) each firm plays their dominant strategy
• B) firm A sets a high price and firm B sets a low price
• C) firm A sets a low price and firm B sets a high price
• D) the two firms could successfully collude

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Definitions:

Cognitive Ability

The mental capacity for processing information, applying knowledge, and changing preferences or behavior based on knowledge or reasoning.

Generalizable

Valid in other contexts beyond the context in which the selection method was developed.

Publishing Company

A business specializing in producing and distributing books, magazines, journals, or digital content.

Economic Value

The worth of a good or service determined by the market or its impact on an entity's financial condition.