The Following Table Shows the Payoffs (Profits) of the Two

question 129

Multiple Choice

The following table shows the payoffs (profits) of the two firms in a duapoly industry who produce a nondifferentiated product. Each firm has two options: charge a high price of $70, or the minimum possible price of $50. The first number in the payoff cells is the profit of Firm A, and the second number is the profit of Firm B. Assume that both firms are after maximum profit.

-Refer to the table above.What is the equilibrium result in this duopoly market?

• A) Firm A charging $70, and Firm B charging $70
• B) Firm A charging $70, and Firm B charging $50
• C) Firm A charging $50, and Firm B charging $70
• D) Firm A charging $50, and Firm B charging $50

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Definitions:

Cognitive Skills

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