Table 11-7 Table 11-7 Shows the Payoff Matrix for Walmart

question 236

Multiple Choice

Table 11-7
Table 11-7 shows the payoff matrix for Walmart and Target from every combination of pricing strategies for the popular PlayStation 4. At the start of the game each firm charges a low price and each earns a profit of $7,000.
-Refer to Table 11-7.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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Definitions:

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the amount borrowed.

Discretionary Fiscal Policy

Government strategy that includes altering its expenditure and taxation levels to oversee and impact a country's economic conditions.

Government Securities

Government securities are financial instruments issued by the government to finance its expenditures, offering investors a return in the form of interest payments.

Private Demand

The desire and willingness of individuals and entities to purchase goods and services in a free market.