Figure: Payoff Matrix for Gehrig and Gabriel

question 27

Multiple Choice

Figure: Payoff Matrix for Gehrig and Gabriel
(Figure: Payoff Matrix for Gehrig and Gabriel) The figure Payoff Matrix for Gehrig and Gabriel refers to two people who sell handmade Davy Crockett figurines in San Antonio.Both Gehrig and Gabriel have two strategies available to them: to produce 5,000 figurines each month or to produce 7,000 figurines each month.If both follow a tit-for-tat strategy, equilibrium will be reached when:

• A)each produces 5,000 figurines.
• B)each produces 7,000 figurines.
• C)Gehrig produces 7,000 figurines and Gabriel produces 5,000 figurines.
• D)Gehrig produces 5,000 figurines and Gabriel produces 7,000 figurines.

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Definitions:

Unit Elastic

A demand or supply situation where a percentage change in price results in an equal percentage change in the quantity demanded or supplied.

Revenue Inelastic

A situation where the revenue from a product does not significantly change with fluctuations in its price, indicating a low sensitivity to price changes.

Total Revenues

Total Revenues are the overall income generated by a company from selling goods or services before deducting any costs.

Unit Elastic

Unit elastic describes a situation in which the percentage change in quantity demanded is equal to the percentage change in price, resulting in no overall revenue change for the supplier.