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Using the Following Payoff Table for Hardaway Corporation and Paxton

Question 37

Multiple Choice

Using the following payoff table for Hardaway Corporation and Paxton Industries. These two firms must make simultaneous pricing decisions. They can choose low, medium, or high prices. The payoffs given are in thousands of dollars of profit per month.
 Paxton Industries Hardaway Corp.  Low  Medium  High Low  A BC$30,$30$45,$20$32,$20Medium  D EF$20,$45$40,$40$45,$35High GHI$15,$48$38,$52$50,$50 Payoffs in thousands of dollars of monthly profits. \begin{array} { l } &\text { Paxton Industries }\\ \text {Hardaway Corp. }&\begin{array}{l|lc|ll|ll|}&{\text { Low }} && {\text { Medium }} && {\text { High }} \\\hline\text {Low }& \text { A } & & \mathrm{B} & & \mathrm{C} & \\&& \$ 30, \$ 30 & & \$ 45, \$ 20 & & \$ 32, \$ 20 \\\hline \text {Medium }&\text { D } & & \mathrm{E} & & \mathrm{F} & \\&& \$ 20, \$ 45 & & \$ 40, \$ 40 & & \$ 45, \$ 35 \\\hline \text {High }&\mathrm{G} & & \mathrm{H} & & \mathrm{I} & \\&& \$ 15, \$ 48 & & \$ 38, \$ 52 & & \$ 50, \$ 50 \\\hline\end{array}\\ &\text { Payoffs in thousands of dollars of monthly profits. }\\\end{array}
-For the simultaneous pricing decision facing Hardaway Corporation and Paxton Industries,


A) cell I is a strategically stable pricing outcome.
B) cell A is the likely outcome of the pricing decision.
C) cell E is the equilibrium pricing decision.
D) both firms pricing low is a Nash equilibrium.
E) both b and d.

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