Scenario: Two Firms in a Market Must Choose Between Two

question 80

Multiple Choice

Scenario: Two firms in a market must choose between two alternative strategies: X and Y. The figure below shows the game tree that these firms can use to make their decisions.

-Refer to the scenario above.Which of the following is true?

• A) Firm 2 should follow Strategy X if Firm 1 follows Strategy X.
• B) Firm 2 should follow Strategy Y if Firm 1 follows Strategy Y.
• C) Firm 2 should follow Strategy X if Firm 1 follows Strategy Y.
• D) Firm 1 should always follow Strategy X.