Refer to the information provided in Table 14.4 below to answer the question that follows.
Table 14.4
B's Strategy
$$\begin{array} { l l l l }
\hline & & \text { Raise Price } & \text { Don't Raise Price } \
\hline & \text { Raise } & \text { A's profit } \$ 6,000 & \text { A's profit } \$ 20,000 \
& \text { Price } & \text { B's profit } \$ 6,000 & \text { B's profit } \$ 30,000 \
\text { A's Strategy } & & & \
& \text { Don't A's profit } \$ 30,000 & \text { A's profit } \$ 10,000 \
& \text { Raise } & B ^ { \prime } \text { s profit } \$ 20,000 & \text { B's profit } \$ 10,000
\end{array}$$
-Refer to Table 14.4. Firm A does not have a dominant strategy.

Question

Refer to the information provided in Table 14.4 below to answer the question that follows.
Table 14.4
B's Strategy
 $$\begin{array} { l l l l } 
\hline & & \text { Raise Price } & \text { Don't Raise Price } \
\hline & \text { Raise } & \text { A's profit } \$ 6,000 & \text { A's profit } \$ 20,000 \
& \text { Price } & \text { B's profit } \$ 6,000 & \text { B's profit } \$ 30,000 \
\text { A's Strategy } & & & \
& \text { Don't A's profit } \$ 30,000 & \text { A's profit } \$ 10,000 \
& \text { Raise } & B ^ { \prime } \text { s profit } \$ 20,000 & \text { B's profit } \$ 10,000
\end{array}$$
-Refer to Table 14.4. Firm A does not have a dominant strategy.

Quizplus · Accepted Answer

A dominant strategy is one that results in the highest payoff for a player regardless of what the other player does. In Table 14.4, Firm A's best response depends on Firm B's action: if B raises the price, A's best response is to not raise the price ($30,000 > $6,000), and if B doesn't raise the price, A's best response is to raise the price ($20,000 > $10,000). Since A's best response changes based on B's action, A does not have a dominant strategy.

Refer to the Information Provided in Table 14 -Refer to Table 14