The Following Payoff Matrix Shows the Profits Accruing to Two

question 60

Multiple Choice

The following payoff matrix shows the profits accruing to two firms,Company A and Company B,under different pricing strategies.In each cell,the figure on the left indicates Company A's payoff and the figure on the right indicates Company B's payoff.
Table 15-2
-Refer to Table 15-2.Using iterated dominance,one can conclude that in equilibrium:

• A)company A chooses a high price and company B chooses a medium price.
• B)both company A and company B choose a high price.
• C)both company A and company B choose a medium price.
• D)company A chooses a medium price and company B chooses a high price.

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Definitions:

Nominal Interest Rate

The interest rate before adjustment for inflation, representing the actual percentage earned or paid on a financial investment or loan.

Consumer Price Index (CPI)

A measure of the overall cost of the goods and services bought by a typical consumer.

Inflation Rate

The percentage increase in the price of goods and services over time, which leads to a decrease in the ability to purchase.

Base Period

A specific point in time or period that is used as a reference for the calculation of index numbers, such as price indexes or economic indicators.