The following matrix gives the profits (in thousands of dollars)for Firm 1 and Firm 2 from high-price,medium-price,and low-price pricing strategies:
Table 10-1

-Refer to Table 10-1.Identify the true statement.
A)The players must use mixed strategies since the game does not have a pure-strategy equilibrium.
B)The value of the game is indeterminate.
C)The firm that gets to choose its pricing strategy first will maximize profits irrespective of the other firm's actions.
D)The outcome of the game represents a dominant-strategy equilibrium.
E)The optimal solution to the game can be obtained through backward induction.

Question

The following matrix gives the profits (in thousands of dollars)for Firm 1 and Firm 2 from high-price,medium-price,and low-price pricing strategies:
Table 10-1
 
-Refer to Table 10-1.Identify the true statement.
A)The players must use mixed strategies since the game does not have a pure-strategy equilibrium. 
B)The value of the game is indeterminate. 
C)The firm that gets to choose its pricing strategy first will maximize profits irrespective of the other firm's actions. 
D)The outcome of the game represents a dominant-strategy equilibrium. 
E)The optimal solution to the game can be obtained through backward induction.

Quizplus · Accepted Answer

The Answer of The following matrix gives the profits (in thousands of dollars)for Firm 1 and Firm 2 from high-price,medium-price,and low-price pricing strategies:
Table 10-1
 
-Refer to Table 10-1.Identify the true statement.
A)The players must use mixed strategies since the game does not have a pure-strategy equilibrium. 
B)The value of the game is indeterminate. 
C)The firm that gets to choose its pricing strategy first will maximize profits irrespective of the other firm's actions. 
D)The outcome of the game represents a dominant-strategy equilibrium. 
E)The optimal solution to the game can be obtained through backward induction.

The Following Matrix Gives the Profits (In Thousands of Dollars)for