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

question 172

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 pricing PlayStations is a repeated game in which Wal-Mart and Target will be selling the game system in competition over a long period of time.In this case, what is the most likely outcome?

• A)a noncooperative equilibrium in which each firm charges the high price
• B)a cooperative equilibrium in which each firm charges the high price
• C)a noncooperative equilibrium in which each firm charges the low price
• D)a cooperative equilibrium in which each firm charges the low price

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