The following table shows the payoff matrix of the two firms (Firm X and Firm Y) in dollars when they advertise and when they do not advertise. Table 11.1
-According to the Table 11.1,if the firms collude and decide not to advertise their combined payoff is:
A)$250.
B)$260.
C)$330.
D)$300.
E)$280

Question

The following table shows the payoff matrix of the two firms (Firm X and Firm Y) in dollars when they advertise and when they do not advertise. Table 11.1  
-According to the Table 11.1,if the firms collude and decide not to advertise their combined payoff is:
A)$250. 
B)$260. 
C)$330. 
D)$300. 
E)$280

Quizplus · Accepted Answer

If the firms collude and decide not to advertise, the combined payoff is the sum of their individual payoffs when they do not advertise, which is (150+180) = $330. This is the highest combined payoff they can achieve, so it is the best choice for both firms.

The Following Table Shows the Payoff Matrix of the Two