The Following Depicts a Normal-Form Game of Price Competition Suppose the Game Is Infinitely Repeated,and the Interest Rate Is

question 125

Multiple Choice

The following depicts a normal-form game of price competition. $\begin{array}{l}\quad\quad\quad\quad\quad\quad\text { Firm B}\\\text { Firm A}\begin{array}{|l|l|l|} \hline &\text { Low Price } & \text { High Price }\\\hline & & \\\text { Low Price } & 0,0 & 25,-5 \\\hline & & \\\text { High Price } & -5,25 & 10,10 \\\hline\end{array}\end{array}$ Suppose the game is infinitely repeated,and the interest rate is 5 percent.Both firms agree to charge a high price,provided no player has charged a low price in the past.If both firms stick to this agreement,then the present value of firm B's payoffs are:

• A) 105.
• B) 190.
• C) 210.
• D) 525.

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Definitions:

Sales Returns

Goods returned by the customer to the seller for a refund or credit, reducing the total sales revenue.

Net Sales

Net sales refer to the amount of revenue generated from product sales after deducting returns, allowances for damaged goods, and discounts.

Vertical Analysis

A financial statement analysis method that lists each line item as a percentage of a base figure within the same statement.

Net Income

The total earnings of a company after subtracting all expenses from revenue.