-Figure 12.2 shows the decision tree for setting price for the only two firms in a market.If both firms follow their dominant strategies
A) both firms will set price high.
B) both firms will set price low.
C) only one firm will set price low.
D) The firms' dominant strategies cannot be determined without more information.

Question

-Figure 12.2 shows the decision tree for setting price for the only two firms in a market.If both firms follow their dominant strategies
A) both firms will set price high. 
B) both firms will set price low. 
C) only one firm will set price low. 
D) The firms' dominant strategies cannot be determined without more information.

Quizplus · Accepted Answer

Both firms setting the price low is the outcome when each follows their dominant strategy, as indicated by the decision tree analysis which typically shows the optimal decision (dominant strategy) for each player given the strategies of the others.