Table 14-8 Two Rival Oligopolists in the Athletic Supplements Industry, the Power

question 240

Multiple Choice

Table 14-8

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 14-8 shows the payoff matrix with the profits that each firm can expect to earn depending on the pricing strategy it adopts.
-Refer to Table 14-8.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.

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Definitions:

Functional MRI

A neuroimaging technique that measures brain activity by detecting changes associated with blood flow.

Double-blind Technique

An experimental procedure in which neither the participants nor the experimenters know who is receiving a particular treatment, to prevent bias.

Experimenter Bias

A form of research bias where the expectations or preferences of the researcher unconsciously influence the outcome of the study.

Single-blind Experiment

An experimental design in which the participants do not know which group (experimental or control) they belong to, but the researchers do.