Refer to the Profits-Payoff Table for a Duopoly

question 117

Multiple Choice

Refer to the profits-payoff table for a duopoly. If initially firm X's price was $6 and Y's price was $5,

• A)X would find it profitable to cut its price, provided Y also cut its price.
• B)Y would find it profitable to cut its price, provided X also cut its price.
• C)Y would find it profitable to raise its price by $1, provided X would also raise its price by $1.
• D)both firms would profit by simultaneously lowering their prices by $1.

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Definitions:

Philanthropic Goodwill

The level of social responsibility in which a business does good without the expectation of anything in return.

Social Responsibility

Involves businesses making decisions and taking actions that benefit society as well as themselves.

Philanthropic Goodwill

The positive reputation and supportive engagement generated by a company or individual's charitable activities and contributions to society.

Economic Responsibility

An entity's duty to make decisions that benefit the economic well-being of society and stakeholders.