Two neighboring casinos are in a price competition if they. compete indefinelty

Question

Two neighboring casinos are in a price competition if they. compete indefinelty which strategy should each casino adopt. Choose from answers in the image with all work thanks Two Neighboring Casinos are in a price competition If they compete indefinitely, which strategy should each casino adopt? Casino Y Low Price High Price Low Price 0. 0 50. -10 Casino High Price10. 5025.25 Select one: O O O a. Casino X to charge a low price, and Casino Y will charge a high price b. Casino X to charge a high price, and Casino Y will charge a high price c. Casino X to charge a low price, and Casino Y will charge a low price d. Casino X to charge a high price, and Casino Y will charge a low price

Explanation / Answer

The correct choice is b

Explanation : - If Casino X charges a high price and casino Y charges a high price, then the return for casino X and casino Y is 25 . Thus the best strategy is to for both casinos to charge high so that they both realize a gain of 25 . If the casinos adopt a different strategy other than charging high prices, then only one of the casino gains while the other looses.

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