Table 14-2 Table 14-2 Shows the Payoff Matrix for Walmart and Target

question 57

Multiple Choice

Table 14-2

Table 14-2 shows the payoff matrix for Walmart 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.For each firm, is there a better outcome than the current situation in which each firm charges the low price and earns a profit of $7,000?

• A)Yes, the firms can implicitly collude and agree to charge a higher price.
• B)No, there is no incentive for each firm to consider any other strategy.
• C)No, any other strategy hurts consumers.
• D)Yes, each firm can implicitly agree to increase output and not to deviate from a low price.