Exhibit 11-4
-Refer to Exhibit 11-4. Which of the following statements is false?
A)If combined profits fall, if one firm charges the monopoly price the other will charge the competitive price, if the game is played only once.
B)The two firms would do best if they charged the price they have the least incentive to charge.
C)If both firms charge the competitive price, neither makes any economic profit.
D)If firm A prices at the monopoly price and firm B prices at the competitive price, firm B will make an economic profit of $15,000.
E)Regardless of which price firm A chooses, the best alternative for firm B is the monopoly price.

Question

Exhibit 11-4 
-Refer to Exhibit 11-4. Which of the following statements is false?
A)If combined profits fall, if one firm charges the monopoly price the other will charge the competitive price, if the game is played only once. 
B)The two firms would do best if they charged the price they have the least incentive to charge. 
C)If both firms charge the competitive price, neither makes any economic profit. 
D)If firm A prices at the monopoly price and firm B prices at the competitive price, firm B will make an economic profit of $15,000. 
E)Regardless of which price firm A chooses, the best alternative for firm B is the monopoly price.

Quizplus · Accepted Answer

If firm A chooses the monopoly price, firm B's best response is to charge the competitive price to maximize its profit, not the monopoly price.

Exhibit 11-4 -Refer to Exhibit 11-4. Which of the Following Statements Is