Table 12.2 Table 12.2 Shows the Payoff Matrix for London Drugs and Matrix

question 79

Multiple Choice

Table 12.2

Table 12.2 shows the payoff matrix for London Drugs and FutureShop from every combination of pricing strategies for the popular PlayStation 3. At the start of the game, each firm charges a low price and each earns a profit of $7,000.
-Refer to Table 12.2.For each firm, is there a better outcome than the current situation in which each firm charges the low price and earns a profit of $7,000?

• A)Yes, the firms can implicitly collude and agree to charge a higher price.
• B)No, there is no incentive for each firm to consider any other strategy.
• C)No, any other strategy hurts consumers.
• D)Yes, each firm can implicitly agree to increase output and not to deviate from a low price.

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