Based on the following payoff matrix for a duopoly in which the numbers indicate
ID: 1107345 • Letter: B
Question
Based on the following payoff matrix for a duopoly in which the numbers indicate the profit in dollars for a high-price or a low-price strategy.
If both firms operate independently and do not collude, the most likely profit is
Please explain
$45 for Firm A and $20 for Firm B
$30 for Firm A and $30 for Firm B
$20 for Firm A and $45 for Firm B
$39 for Firm A and $39 for Firm B
A)$45 for Firm A and $20 for Firm B
B)$30 for Firm A and $30 for Firm B
C)$20 for Firm A and $45 for Firm B
D)$39 for Firm A and $39 for Firm B
Explanation / Answer
Answer.) B.) $30 for Firm A and $30 for Firm B
If both firms operate independently and do not collude, then its most likely that both firms will follow their dominant strategies of "LOW PRICE" in which both firms are earning a profit of $30 each.
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