(Scenario: Payoff Matrix for Two Computer Manufacturers) Use Scenario: Payoff Matrix for Two Computer Manufacturers. If both firms pursue their BEST response:
Scenario: Payoff Matrix for Two Computer Manufacturers
The following table provides the payoff matrix for two firms, Dell and HP. They are the only two firms in the industry and can either compete or cooperate with each other, with the following profit results reflecting their actions.

A)their joint profits are maximized.
B)their joint profits are not maximized.
C)their joint profits reflect an equal sharing of the total profits.
D)neither can attain its largest possible profits since there are two dominant strategies for each firm.

Question

(Scenario: Payoff Matrix for Two Computer Manufacturers) Use Scenario: Payoff Matrix for Two Computer Manufacturers. If both firms pursue their BEST response:
Scenario: Payoff Matrix for Two Computer Manufacturers
The following table provides the payoff matrix for two firms, Dell and HP. They are the only two firms in the industry and can either compete or cooperate with each other, with the following profit results reflecting their actions.
 
A)their joint profits are maximized. 
B)their joint profits are not maximized. 
C)their joint profits reflect an equal sharing of the total profits. 
D)neither can attain its largest possible profits since there are two dominant strategies for each firm.

Quizplus · Accepted Answer

If both firms pursue their BEST response, they will both choose to cooperate, resulting in joint profits of $16 billion, which is the maximum amount possible in the matrix.