Table 16-4
in the Following Duopoly Game, the Two Firms

question 146

Multiple Choice

Table 16-4
In the following duopoly game, the two firms can either set the price of their product high or low.In this market, customers are very price sensitive: when one firm sets a low price it steals the majority of customers from its competitor.The game is represented in the table below. $\begin{array}{|c|c|c|c|}\hline&&\text { Firm B }\\&&\text { High Price }&\text { Low Price }\\\hline \text { Firm A }&\text { High Price }&\text { Firm A gets \$500 } & \text { Firm A get \$300 } \\&& \text { Firm B gets \$500 } & \text { Firm B gets \$600 } \\\hline &\text { Low Price }&\text { Firm A gets \$600 } & \text { Firm A gets \$400 } \\&&\text { Firm B gets \$300 } & \text { Firm B gets \$400 } \\\hline\end{array}$
-Refer to table 16-4.The dominant strategy for the firms are:

• A)firm A sets low price, firm B sets low price
• B)firm A sets low price, firm B sets high price
• C)firm A sets high price, firm B sets low price
• D)firm A sets high price, firm B sets high price