The horizontal axis is labeled firm A. It ranges from high price to low price from left to right. The vertical axis is labeled firm B. It ranges from low price to high price from bottom to top. The prices of firm A and firm B are as follows. Cell 1. Firm B high price and firm A high price: A = 250 dollars, B = 250 dollars. Cell 2. Firm B high price and firm A low price: A = 325 dollars, B = 200 dollars. Cell 3. Firm B low price and firm A high price: A = 200 dollars, B = 325 dollars. Cell 4. Firm B low price and firm A low price: A = 175 dollars, B = 175 dollars.
Answer the question based on the payoff matrix for a duopoly in which the numbers indicate the profit in millions of dollars for each firm. If Firm B adopts the low-price strategy, then Firm A would adopt the
Multiple Choice
high -price strategy and earn $325.
high-price strategy and earn $250.
low-price strategy and earn $175.
low-price strategy and earn $200.
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