Figure 17-4. Two companies, Acme and Bilco, are sellers in the same market. Each company decides whether to charge a high price or a low price. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies.

-Refer to Figure 17-4.If the two companies make their pricing decisions independently,then it is likely that Bilco will

Question

Figure 17-4. Two companies, Acme and Bilco, are sellers in the same market. Each company decides whether to charge a high price or a low price. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies.
 
-Refer to Figure 17-4.If the two companies make their pricing decisions independently,then it is likely that Bilco will

Quizplus · Accepted Answer

In the given game, both companies have a dominant strategy to charge a low price, as it results in a higher payoff regardless of what the other company does. Therefore, Bilco will charge a low price regardless of whether Acme charges a high or low price.