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

question 187

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.If both firms decide to collude and charge $70 for their product,

• A) Firm A is going to change its pricing strategy to $50.
• B) Firm B is going to change its pricing strategy to $50.
• C) Both Firm A and Firm B are going to change their pricing strategy to $50.
• D) Both firms will gain a profit(payoff) greater than $1000 each.

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Definitions:

Order Preferences

A term referring to the prioritization or arrangement of choices or interests according to a person's values, needs, or desires.

Observation

Observing behaviors of an individual to develop a deeper understanding of one or more specific behaviors (e.g., observing a student’s acting-out behavior in class or assessing a client’s ability to perform eye–hand coordination tasks to determine potential vocational placements). It includes time sampling, event sampling, and time and event sampling. It is a type of informal assessment.

Examiner

An individual who administers tests, evaluations, or assessments, often in the educational, psychological, or health-related fields.

Client

A person or organization availing the services or advice of a professional or company.