Table 17-7
Two companies, Wonka and Gekko, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits (in millions of dollars) for the two companies.

-Refer to Table 17-7. If this game is played only once, then the most likely outcome is that
A)both firms produce a poor quality product.
B)Wonka produces a poor quality product and Gekko produces a good quality product.
C)Wonka produces a good quality product and Gekko produces a poor quality product.
D)both firms produce a good quality product.

Question

Table 17-7
Two companies, Wonka and Gekko, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits (in millions of dollars) for the two companies.
 
-Refer to Table 17-7. If this game is played only once, then the most likely outcome is that
A)both firms produce a poor quality product. 
B)Wonka produces a poor quality product and Gekko produces a good quality product. 
C)Wonka produces a good quality product and Gekko produces a poor quality product. 
D)both firms produce a good quality product.

Quizplus · Accepted Answer

Both firms have a dominant strategy of producing a good quality product.

Table 17-7 Two Companies, Wonka and Gekko, Each Decide Whether to Produce