Table 17-17.Consider a small town that has two grocery stores from which residents can choose to buy a gallon of milk.The store owners each must make a decision to set a high milk price or a low milk price.The payoff table,showing profit per week,is provided below.The profit in each cell is shown as (Store 1,Store 2).

-Refer to Table 17-17.If grocery store 1 sets a high price,what price should grocery store 2 set? And what will grocery store 2's payoff equal?

Question

Table 17-17.Consider a small town that has two grocery stores from which residents can choose to buy a gallon of milk.The store owners each must make a decision to set a high milk price or a low milk price.The payoff table,showing profit per week,is provided below.The profit in each cell is shown as (Store 1,Store 2).
 
-Refer to Table 17-17.If grocery store 1 sets a high price,what price should grocery store 2 set? And what will grocery store 2's payoff equal?

Quizplus · Accepted Answer

Grocery store 1 sets a high price, so grocery store 2 should set a low price to attract customers. If grocery store 2 sets a low price, it will have a payoff of $800.