Use the following to answer questions:
Figure: Pricing Strategy in Cable TV Market II
-(Figure: Pricing Strategy in Cable TV Market II) Look at the figure Pricing Strategy in Cable TV Market II. If CableNorth followed a high-price strategy one month just to find it only earned $80,000 because CableSouth followed a low-price strategy, and CableNorth decided to lower prices for the next month, we would say that CableNorth is following:
A) a kinked demand model.
B) a dominant strategy.
C) a tit-for-tat strategy.
D) a collusive strategy.

Question

Use the following to answer questions:
Figure: Pricing Strategy in Cable TV Market II 
-(Figure: Pricing Strategy in Cable TV Market II) Look at the figure Pricing Strategy in Cable TV Market II. If CableNorth followed a high-price strategy one month just to find it only earned $80,000 because CableSouth followed a low-price strategy, and CableNorth decided to lower prices for the next month, we would say that CableNorth is following:
A) a kinked demand model. 
B) a dominant strategy. 
C) a tit-for-tat strategy. 
D) a collusive strategy.

Quizplus · Accepted Answer

CableNorth is following a tit-for-tat strategy because it is responding to CableSouth's low-price strategy by also lowering its prices in the next month. This strategy involves mimicking the competitor's previous action.

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