The Following Depicts a Normal-Form Game of Price Competition What Is the Maximum Interest Rate That Can Sustain Collusion

question 108

Multiple Choice

The following depicts a normal-form game of price competition. $\begin{array}{l}\quad\quad\quad\quad\quad\quad\text { Firm B}\\\text { Firm A}\begin{array}{|l|l|l|} \hline &\text { Low Price } & \text { High Price }\\\hline & & \\\text { Low Price } & 0,0 & 25,-5 \\\hline & & \\\text { High Price } & -5,25 & 10,10 \\\hline\end{array}\end{array}$ What is the maximum interest rate that can sustain collusion?

• A) 66.7 percent
• B) 33 percent
• C) 25 percent
• D) 15 percent

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Definitions:

Policy Change

Modifications or alterations made to existing rules, laws, or regulations.

Low-Income Families

Households earning significantly below the median income of a geographical area, often facing financial stress.

Equitable

Fair or impartial treatment, especially in the context of the distribution of wealth or opportunities.

Voluntary Exchange

A transaction where two parties trade goods or services by mutual agreement and benefit.