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

question 314

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.Suppose Walmart and Target both advertise that they will match the lowest price offered by any competitor.What is the purpose of such a strategy?

• A) to signal to each other not to charge below the current low price
• B) to signal to each other that they will not hesitate to initiate a price war
• C) to signal to each other that they intend to charge the high price
• D) to signal to each other to share the market equally

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Definitions:

Adapt Thinking

The process of adjusting one's thoughts and cognitive processes in response to new information or environments.

Growth

An increase in size, number, value, or strength.

Sigmund Freud

An Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Contradiction

A situation or statement in which two or more opposing things are true or valid at the same time, highlighting a discrepancy or conflict.