Table 11-13 Two Rival Oligopolists in the Athletic Supplements Industry, the Power

question 299

Multiple Choice

Table 11-13
$\begin{array}{c} \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad\text { Power Fuel's (P) Strategy }\\\text { Brawny Juice's (B) Strategy }\begin{array}{|c|c|c|} \hline& \text { High Price } & \text { Low Price } \\\hline{\text { High Price }} & \text { P: } \$ 12 \mathrm{~m} & \text { P: } \$ 16 \mathrm{~m} \\& \text { B: } \$ 12 \mathrm{~m} & \text { B: } \$ 4 m \\\hline {\text { Low Price }} & \text { P: } \$ 4 \mathrm{~m} & \text { P: } \$ 8 \mathrm{~m} \\& \text { B: } \$ 16 \mathrm{~m} & \text { B: } \$ 8 \mathrm{~m}\\\hline\end{array}\end{array}$
Two rival oligopolists in the athletic supplements industry, the Power Fuel Company and the Brawny Juice Company, have to decide on their pricing strategy.Each can choose either a high price or a low price.Table 11-13 shows the payoff matrix with the profits that each firm can expect to earn depending on the pricing strategy it adopts.
-Refer to Table 11-13.If the two firms collude,is there an incentive for either to cheat on the collusion agreement?

• A)No, neither firm can gain by cheating.
• B)Yes, but only Brawny Juice is in a position to gain by cheating.
• C)Yes, but only Power Fuel is in a position to gain by cheating.
• D)Yes, either firm can gain if it alone cheats.

---

Definitions:

Earn Income

The acquisition of money in return for labor or services provided.

Classroom Training Methods

Educational techniques and procedures used in a classroom setting to impart knowledge or skills.

Internship

A period of work experience offered by an organization for a limited period of time, often by students or graduates seeking skills for a new career.

International Business Management

The study and application of business strategies designed to facilitate and manage transactions across international borders.