The Numbers in Each Cell Are Each Firm's Profits Refer to the Figure Above

question 21

Multiple Choice

The numbers in each cell are each firm's profits. $\begin{array}{c}\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Column Cafe }\\\text { Row Restaurant }\begin{array}{|l|l|l|}\hline & \begin{array}{l}\text { Publish Coupons in } \\\text { Student Paper }\end{array} & \text { No Coupons } \\\hline \text { Publish Coupons in } & \text { Row: 25, } & \text { Row: 200, } \\\text { Student Paper } & \text { Column: 25 } & \text { Column: 10 } \\\hline \text { No Coupons } & \text { Row: 10, } & \text { Row: 120, } \\& \text { Column: 200 } & \text { Column: 120 } \\\hline\end{array}\end{array}$
Refer to the figure above.The payoffs of this game are such that:

• A) if Row Restaurant expects that Column Cafe will choose its dominant strategy,Row should choose to not follow its own dominant strategy.
• B) profits at both firms would be highest if both firms follow their dominant strategies.
• C) both firms would benefit from a law that made publishing coupons illegal.
• D) an agreement to not publish coupons would be stable because with these profits neither firm has an incentive to defect.

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Definitions:

Industries

Sectors or categories of business activity focused on the production or delivery of goods and services.

Employer-Provided

Services or benefits offered to employees directly by their employer, such as health insurance, retirement plans, or transportation allowances.

Less Cost

Refers to a reduction in expenses or costs incurred by an organization or individual.

Direct Pay

Wages or salaries that employees receive directly from their employer as compensation for their labor.