(Figure: Payoff Matrix for Blue Bottle and Opal Ocean) Use Figure: Payoff Matrix for Blue Bottle and Opal Ocean. The figure shows the potential profits of two producers of bottled water. Each has two strategies available to it: a high price and a low price. The BEST response for Opal Ocean is to:

A)charge a low price.
B)charge a high price.
C)adopt the same strategy as Blue Bottle.
D)Opal Ocean does not have a best response.

Question

(Figure: Payoff Matrix for Blue Bottle and Opal Ocean) Use Figure: Payoff Matrix for Blue Bottle and Opal Ocean. The figure shows the potential profits of two producers of bottled water. Each has two strategies available to it: a high price and a low price. The BEST response for Opal Ocean is to:
​
 
A)charge a low price. 
B)charge a high price. 
C)adopt the same strategy as Blue Bottle. 
D)Opal Ocean does not have a best response.

Quizplus · Accepted Answer

The best response for Opal Ocean is to charge a low price. This is because if Blue Bottle charges a low price, then Opal Ocean's profit will be higher if they charge a low price too. If Blue Bottle charges a high price, Opal Ocean will still have a higher profit if they charge a low price. Therefore, charging a low price is the dominant strategy for Opal Ocean.