-Refer to the payoff matrix above. If Best Lights and Bright Lights both set a High Price, the profit for Best Lights are _________ and the profit for Bright Lights are _________ than if both firms set a Low Price.
A)lower; higher
B)higher; lower
C)higher; higher
D)lower; lower

Question

-Refer to the payoff matrix above. If Best Lights and Bright Lights both set a High Price, the profit for Best Lights are _________ and the profit for Bright Lights are _________ than if both firms set a Low Price.
A)lower; higher 
B)higher; lower 
C)higher; higher 
D)lower; lower

Quizplus · Accepted Answer

When both firms set a high price, they typically avoid a price war, which can lead to higher profits for both compared to if they both set low prices. This is because setting high prices allows both firms to enjoy a higher margin per unit sold, assuming demand remains relatively stable.

-Refer to the Payoff Matrix Above