Table 16-2
in the Following Duopoly Game, the Two Firms

question 158

Multiple Choice

Table 16-2
In the following duopoly game, the two firms can either set the price of their product high or low.The game is represented in the table below. $\begin{array}{|c|c|c|c|}\hline&&\text { Firm B }\\&&\text { High Price }&\text { Low Price }\\\hline \text { Firm A }&\text { High Price }&\text { Firm A gets \$1000 } & \text { Firm A get \$1250 } \\&& \text { Firm B gets \$1000 } & \text { Firm B gets \$1100 } \\\hline &\text { Low Price }&\text { Firm A gets \$800 } & \text { Firm A gets \$900 } \\&&\text { Firm B gets \$800 } & \text { Firm B gets \$900 } \\\hline\end{array}$
-Refer to Table 16-2.If the two firms wanted to achieve the optimal level of profit they would:

• A)both sell at a low price
• B)both sell at a high price
• C)collude to let firm A sell at a low price and firm B to sell at a high price
• D)collude to let firm A sell at a high price and firm B to sell at a low price

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenses to the period in which they actually occurred, ensuring the financial statements are in compliance with the accrual basis of accounting.

Payroll

Refers to the total amount of wages, salaries, bonuses, and other compensation paid to employees by a company during a specific period.

Unearned Revenues

Unearned revenues are payments received from customers before the company has provided goods or services, reflected as a liability on the balance sheet.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the correct period.