The Figure Shown Represents the Choices and Payoffs (Company Profits)of

question 109

Multiple Choice

The figure shown represents the choices and payoffs (company profits) of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to compete at these prices. The Rock Shop is trying to decide whether or not it should enter the market.If MiiTunes chooses its dominant strategy, we can predict that The Rock Shop:

• A)will enter the market and will earn $4 million.
• B)will enter the market and will lose $2 million.
• C)will not enter the market and will earn $0.
• D)The Rock Shop's decision cannot be predicted because it does not have a dominant strategy.