Answer the Next Question Based on the Following Payoff Matrix

question 176

Multiple Choice

Answer the next question based on the following payoff matrix for a duopoly.The numbers indicate the profit in thousands of dollars for a high-price or a low-price strategy Refer to the above payoff matrix.Assume that firm Y adopts a low-price strategy while firm X maintains a high-price strategy.Compared to the results from a high-price strategy for both firms,firm Y will now:

• A) gain $100,000 in profit and firm X will lose $150,000 in profit.
• B) gain $150,000 in profit and firm X will lose $100,000 in profit.
• C) gain $525,000 in profit and firm X will lose $275,000 in profit.
• D) lose $150,000 in profit and firm X will gain $150,000 in profit.

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Definitions:

Rental Price

The cost of using or occupying property or equipment for a specified period.

Average Productivity

The output produced per unit of input, such as labor or capital, on average.

Total Output

The total quantity of goods and services produced in an economy over a given period of time.

Capital Stock

The total amount of physical goods existing in a company or economy that can be used to produce more goods and services.