Refer to the Normal-Form Game of Price Competition Shown Below

question 141

Multiple Choice

Refer to the normal-form game of price competition shown below. $\begin{array}{l}\quad\quad\quad\quad\quad\quad\text { Firm B}\\\text { Firm A}\begin{array}{|l|l|l|} \hline & \text { C } & \text { D }\\\hline & & \\ \text { A } & 50,50 & 500-x, 200 \\\hline & & \\\text { B } & 100,500-x & 50,50 \\\hline\end{array}\end{array}$ For what values of x is strategy D strictly dominant for firm B?

• A) All x > 450
• B) All x < 450
• C) x = 450
• D) x < 50

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Definitions:

Current Yield

A financial term describing the annual return on an investment, such as a bond, based on the investment's current market price.

Bonds

Fixed income investments representing loans made by an investor to a borrower, typically corporate or governmental.

Maturation

The process by which an investment reaches its full value or final due date.

Current Yield

The annual income return from an investment, expressed as a percentage of the current price of the security.