-Figure 11-13 shows the payoff matrix for two large auto dealerships,Jim's Autos and Tim's Autos.These intense rivals are the largest automobile dealers in the market by far.The matrix shows the profits that each firm would earn from choosing either a low price or a high price.Jim's dominant strategy is to
A)always charge a low price
B)always charge a high price
C)charge a high price if Tim charges a low price
D)charge a low price only when Tim charges a low price
E)follow the price leadership of Tim's Autos

Question

-Figure 11-13 shows the payoff matrix for two large auto dealerships,Jim's Autos and Tim's Autos.These intense rivals are the largest automobile dealers in the market by far.The matrix shows the profits that each firm would earn from choosing either a low price or a high price.Jim's dominant strategy is to
A)always charge a low price 
B)always charge a high price 
C)charge a high price if Tim charges a low price 
D)charge a low price only when Tim charges a low price 
E)follow the price leadership of Tim's Autos

Quizplus · Accepted Answer

A dominant strategy is one that results in the highest payoff for a player, no matter what the other player does. If Jim's dominant strategy is to always charge a low price, it means that charging a low price yields a better or equal outcome for Jim regardless of Tim's pricing strategy.

-Figure 11-13 Shows the Payoff Matrix for Two Large Auto