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Figure: Payoff Matrix II for Blue Spring and Purple Rain
-(Figure: Payoff Matrix II for Blue Spring and Purple Rain)Use Figure: Payoff Matrix II for Blue Spring and Purple Rain.The figure describes two producers of bottled water.If both firms follow a tit-for-tat strategy,then:
A)both firms will charge a high price.
B)both firms will charge a low price.
C)Blue Spring will charge a high price,and Purple Rain will charge a low price.
D)Purple Rain will charge a high price,and Blue Spring will charge a low price.

Question

Use the following to answer question:
Figure: Payoff Matrix II for Blue Spring and Purple Rain 
-(Figure: Payoff Matrix II for Blue Spring and Purple Rain)Use Figure: Payoff Matrix II for Blue Spring and Purple Rain.The figure describes two producers of bottled water.If both firms follow a tit-for-tat strategy,then:
A)both firms will charge a high price. 
B)both firms will charge a low price. 
C)Blue Spring will charge a high price,and Purple Rain will charge a low price. 
D)Purple Rain will charge a high price,and Blue Spring will charge a low price.

Quizplus · Accepted Answer

A tit-for-tat strategy involves mimicking the other player's previous move. If one firm starts by charging a high price, the other will follow in the next round, leading to both maintaining high prices to avoid unilateral price cuts.

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