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answer the question based on the following payoff matrix for a duopoly in which the numbers ndicate the profit in millions of dollars for each firm: Firm B Low Price High Price Firm A High Price A = $250 B = $250 Low Price A $325 B = $200 A = $200 A = $175 B = $325 B =$175 Refer to the above payoff matrix. Assume that firm B adopts a low-price strategy while firm A maintains a high-price strategy. Compared to the results from a high-price strategy for both firms, firm B will now: A) Lose $75 million in profit and firm A will gain $50 million in profit B) Gain $50 million in profit and firm A will lose $50 million in profit C) Gain $75 million in profit and firm A will lose $50 million in profit D) Gain $50 million in profit and firm A will lose $75 million in profit

answer the question based on the following payoff matrix for a duopoly in which the numbers ndicate the profit in millions of dollars for each firm: Firm B Low Price High Price Firm A High Price A = $250 B = $250 Low Price A $325 B = $200 A = $200 A = $175 B = $325 B =$175 Refer to the above payoff matrix. Assume that firm B adopts a low-price strategy while firm A maintains a high-price strategy. Compared to the results from a high-price strategy for both firms, firm B will now: A) Lose $75 million in profit and firm A will gain $50 million in profit B) Gain $50 million in profit and firm A will lose $50 million in profit C) Gain $75 million in profit and firm A will lose $50 million in profit D) Gain $50 million in profit and firm A will lose $75 million in profit

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter12: Price And Output Determination: Oligopoly
Section: Chapter Questions
Problem 1E
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Answer the question based on the following payoff matrix for a duopoly in which the numbers indicate the profit in millions of dollars for each firm: Firm B Low Price High Price O C A B с Firm A Refer to the above payoff matrix. Assume that firm B adopts a low-price strategy while firm A maintains a high-price strategy. Compared to the results from a high-price strategy for both firms, firm B will now: High Price A = $250 D Low Price A = $325 B = $250 B = $200 A = $200 A = $175 B =$175 B = $325 A) Lose $75 million in profit and firm A will gain $50 million in profit B) Gain $50 million in profit and firm A will lose $50 million in profit C) Gain $75 million in profit and firm A will lose $50 million in profit D) Gain $50 million in profit and firm A will lose $75 million in profit
Transcribed Image Text:Answer the question based on the following payoff matrix for a duopoly in which the numbers indicate the profit in millions of dollars for each firm: Firm B Low Price High Price O C A B с Firm A Refer to the above payoff matrix. Assume that firm B adopts a low-price strategy while firm A maintains a high-price strategy. Compared to the results from a high-price strategy for both firms, firm B will now: High Price A = $250 D Low Price A = $325 B = $250 B = $200 A = $200 A = $175 B =$175 B = $325 A) Lose $75 million in profit and firm A will gain $50 million in profit B) Gain $50 million in profit and firm A will lose $50 million in profit C) Gain $75 million in profit and firm A will lose $50 million in profit D) Gain $50 million in profit and firm A will lose $75 million in profit
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