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:

Liquidation Bankruptcy

A bankruptcy procedure where a debtor's assets are sold off to pay creditors, typically under Chapter 7 in the United States.

Savings and Loan Association

A financial institution that specializes in accepting savings deposits and making mortgage and other loans.

Voluntary Bankruptcy

The act of an individual or business initiating bankruptcy proceedings on their own accord as a means to manage insurmountable debt.

Order for Relief

A court order that formally begins the process of providing legal relief to a debtor in a bankruptcy case, offering protection from creditors.