The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms). Table 11.2
-According to Table 11.2,if firm A follows its dominant strategy but firm B does not,firm A earns a profit of:

Question

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms). Table 11.2  
-According to Table 11.2,if firm A follows its dominant strategy but firm B does not,firm A earns a profit of:

Quizplus · Accepted Answer

Firm A's dominant strategy is to select the $500 pricing strategy regardless of what Firm B chooses. If Firm B chooses the $500 pricing strategy, Firm A will earn a profit of $400. If Firm B chooses the $200 pricing strategy, Firm A will earn a profit of $600. Therefore, Firm A will earn a profit of $400 or $600 regardless of what Firm B chooses. Given that Firm A will earn a higher profit of $600 if Firm B chooses the $200 pricing strategy, it is in Firm B's best interest to choose the $200 pricing strategy. Thus, the optimal outcome is when Firm A chooses the $500 pricing strategy and Firm B chooses the $200 pricing strategy, resulting in Firm A earning a profit of $60.

The Table Below Shows the Payoff (Profit) Matrix of Firm