Table 16-2
in the Following Duopoly Game, the Two Firms

question 125

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.What is the profit firm A will earn if it plays its dominant strategy:

• A)$1000 if firm B has a high price and $1250 if firm B has a low price
• B)$1000 if firm B has a high price and $1100 if firm B has a low price
• C)$800 if firm B has a high price and $900 if firm B has a low price
• D)$1250 if firm B has a high price and $1100 if firm B has a low price

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Definitions:

Productivity

The measure of how efficiently goods and services are produced, often gauged by the output per unit of labor input.

Labor

The effort by individuals to produce goods or services in exchange for wages or salary.

Wages

Payments made by employers to employees for their labor, typically calculated on an hourly, daily, or piecework basis.

Marginal Revenue Product

The additional revenue produced by adding one more unit of a specific input (like labor), assuming other inputs remain constant.