For what values of x is strategy D strictly dominant for Firm B? A)All x 450. B)All x

Question

For what values of x is strategy D strictly dominant for Firm B?
A)All x > 450.
B)All x < 450.
C)x = 450.
D)x < 50.

Quizplus · Accepted Answer

To determine the range of values of x for which strategy D is strictly dominant for firm B, we need to compare the profits of firm B from strategy D with those from strategy C at different levels of x. For x > 500, the profit from strategy D is 200 + 0.5(x - 500) = 0.5x + 150. For 450 < x < 500, the profit from strategy D is 100 + 0.4(x - 450) + 0.6(500 - x) = 20 + 0.4x. For x < 450, the profit from strategy C is 50 + 0.8x. Comparing the profit from strategy D with those from strategy C, we can see that strategy D is strictly dominant for firm B when x > 450. Therefore, the best choice is A.

For What Values of X Is Strategy D Strictly Dominant