Table 16-2 In the Following Duopoly Game, the Two Firms Can Either

question 163

Multiple Choice

Table 16-2
In the following duopoly game, the two firms can either set the price of their product high or low. If one firm's price is lower than the other, most of the market will buy from them. This will increase the low-price firm's profit at the expense of the other firm. The game is represented in the table below.

-Refer to Table 16-2. What is the profit firm A will earn if it plays its dominant strategy:

• A) $1000 if firm B has a high price and $1500 if firm B has a low price
• B) $1000 if firm B has a high price and $800 if firm B has a low price
• C) $800 if firm B has a high price and $1250 if firm B has a low price
• D) $800 if firm B has a high price and $1500 if firm B has a low price

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