-Figure 11-13 shows the payoff matrix for two large auto dealerships,Jim's Autos and Tim's Autos.The matrix shows the profits that each firm would earn from choosing either a low price or a high price.The equilibrium level of profit for Jim's Autos would be
A)$250,000
B)$100,000
C)$200,000
D)-$50,000
E)$150,000

Question

-Figure 11-13 shows the payoff matrix for two large auto dealerships,Jim's Autos and Tim's Autos.The matrix shows the profits that each firm would earn from choosing either a low price or a high price.The equilibrium level of profit for Jim's Autos would be
A)$250,000 
B)$100,000 
C)$200,000 
D)-$50,000 
E)$150,000

Quizplus · Accepted Answer

The equilibrium level of profit for Jim's Autos is $100,000, which occurs when both Jim's Autos and Tim's Autos choose the low price strategy, as this is the Nash equilibrium where neither firm can benefit by unilaterally changing their strategy.

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