(Table: Firms a and B X) Two Firms Have Formed

question 10

Multiple Choice

(Table: Firms A and B X) Two firms have formed an agreement to restrict output. They are playing an infinitely repeated game in which output decisions must be made every period. Both firms are using grim trigger strategies.
If d (discount rate) = 0.80, Firm B's expected payoff from following the agreement is ____.

• A) 550
• B) 500
• C) 470
• D) 430