Table 14-8 Two Rival Oligopolists in the Athletic Supplements Industry, the Power

question 88

Multiple Choice

Table 14-8

Two rival oligopolists in the athletic supplements industry, the Power Fuel Company and the Brawny Juice Company, have to decide on their pricing strategy.Each can choose either a high price or a low price.Table 14-8 shows the payoff matrix with the profits that each firm can expect to earn depending on the pricing strategy it adopts.
-Refer to Table 14-8.If the firms cooperate, what prices will they select?

• A)Both firms will select a low price.
• B)Brawny Juice will select a high price; Power Fuel a low price.
• C)Both firms will select a high price.
• D)Brawny Juice will select a low price; Power Fuel a high price.

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Definitions:

Demand

The quantity of a good or service that consumers are willing and able to purchase at a given price over a specified period of time.

Unit Elasticity

A circumstance where the percentage variation in the quantity that is either demanded or supplied matches the percentage variation in its price.

Demand

The amount of a product or service that shoppers are ready and capable of buying at different price levels within a specific period.