Refer to the Following Normal Form Game of Price Competition

question 7

Multiple Choice

Refer to the following normal form game of price competition for questions 20 - 23.

-Suppose the game is infinitely repeated.What strategies will each firm utilize?

• A)Firm A will charge a lower price and firm B will charge a lower price
• B)Firm A will charge a higher price and firm B will charge a lower price
• C)Firm A will charge a lower price and firm B will charge a higher price
• D)Firm A will charge a higher price and firm B will charge a higher price

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Definitions:

Demand for Product

The quantity of a good or service that consumers are willing and able to purchase at various prices during a specified period.

Budget Constraint

An economic framework representing the combinations of goods and services an individual can purchase, given their income and the prices of those goods and services.

Indifference Curve

A graphical representation showing combinations of goods between which a consumer is indifferent, implying equal utility.

Consumer's Income

The total amount of money earned by a consumer that is available for spending and saving.