Exhibit 10-7 Two-Firm Payoff Matrix

question 72

Multiple Choice

Exhibit 10-7 Two-Firm Payoff Matrix

Suppose costs are identical for the two firms in Exhibit 10-7. If both firms assume the other will compete and charge a lower price, equilibrium will be established by:

• A) Camel charging the high price and Marlboro charging the high price.
• B) Camel charging the low price and Marlboro charging the low price.
• C) Camel charging the low price and Marlboro charging the high price.
• D) Camel charging the high price and Marlboro charging the low price.

---

Definitions:

Technological Change

Innovations and improvements in technology that enhance productivity, efficiency, and the overall quality of goods and services.

Income Inequality

Describes the uneven distribution of income among individuals in a society, where some earn significantly more than others.

Redistribution Programs

Government policies or initiatives designed to transfer income or wealth from certain groups of individuals to others, often aiming at reducing economic inequalities.

In-kind Transfers

Non-cash goods and services provided by governments or organizations to individuals, such as food assistance or housing.