A single-period duopoly firm can choose output level A or B.The firm decides it will produce level A regardless of what the other firm produces.This decision may occur because
A) producing the output level A is a dominant strategy.
B) this firm has simply decided to always produce at level A.
C) Both A and B are possible.
D) None of the above.

Question

Quizplus · Accepted Answer

A dominant strategy is one that results in the highest payoff for a player regardless of what the other player does. If a firm decides to produce level A regardless of the other firm's actions, it could be because producing at level A is a dominant strategy. Alternatively, the firm might have decided to always produce at level A for reasons unrelated to it being a dominant strategy, such as simplicity or a contractual obligation. Therefore, both A and B are possible reasons.

A Single-Period Duopoly Firm Can Choose Output Level a or B.The