Table 14-2 Table 14-2 Shows the Payoff Matrix for Wal-Mart and Target

question 131

Multiple Choice

Table 14-2

Table 14-2 shows the payoff matrix for Wal-Mart and Target from every combination of pricing strategies for the popular PlayStation 4.At the start of the game each firm charges a low price and each earns a profit of $7,000.
-Refer to Table 14-2.Suppose Wal-Mart and Target both advertise that they will match the lowest price offered by any competitor.What is the purpose of such a strategy?

• A)to signal to each other not to charge below the current low price
• B)to signal to each other that they will not hesitate to initiate a price war
• C)to signal to each other that they intend to charge the high price
• D)to signal to each other to share the market equally

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Definitions:

Unconstitutional Restriction

An unconstitutional restriction refers to a law or regulation that infringes upon the rights guaranteed by the constitution.

Government Actions

Measures or interventions undertaken by a governmental body to influence or directly affect social, economic, or political conditions.

Public Tranquility

The state of peace and calm in a public community or area, free from disturbances or disorder.

Equal Protection

A constitutional principle that states no individual or group should be denied the same protection of the laws that is enjoyed by other individuals or groups.