-The Above Payoff Matrix Shows the Economic Profits (In Millions

question 162

Multiple Choice

-The above payoff matrix shows the economic profits (in millions of dollars) of two firms in a duopoly that have agreed to a cartel agreement to restrict their output and set their prices equal to the monopoly price. Assuming the game is played once, the equilibrium outcome is where

• A) both choose the monopoly price.
• B) both choose the competitive price.
• C) firm A chooses the monopoly price and firm B chooses the competitive price.
• D) firm B chooses the monopoly price and firm A chooses the competitive price.

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