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The Table Below Shows Annual Profits Received by Two Oligopolists

Question 60

Multiple Choice

The table below shows annual profits received by two oligopolists, Alpha and Beta, depending on whether each company decides whether to live within the collusive agreement they have signed to charge a high price, or to cheat and charge a lower price.

beta’s Strategies AlPHA’sStrategies  Don’t   Cheat  Don’tCheat B: $5 m A: $5 m B: $6 m A $3 m B: $3 m B: $4 m Cheat $6 m A: $4 m\begin{array}{}& \text {beta's Strategies }\\ \text {AlPHA'sStrategies }&\begin{array}{|l|c|c|}\hline & \begin{array}{c}\text { Don't } \\\text { }\end{array} & \text { Cheat } \\\hline \text { Don'tCheat} & \begin{array}{c}\text { B: } \$ 5 \mathrm{~m} \\\text { A: } \$ 5 \mathrm{~m}\end{array} & \begin{array}{c}\text { B: } \$ 6 \mathrm{~m} \\\text { A } \$ 3 \mathrm{~m}\end{array} \\\hline & \begin{array}{c}\text { B: } \$ 3 \mathrm{~m}\end{array} & \text { B: } \$ 4 \mathrm{~m} \\ \text { Cheat } & \$ 6 \mathrm{~m} & \text { A: } \$ 4 \mathrm{~m} \\\hline\end{array}\\\end{array}
-Based on the table,if both Alpha and Beta charge a lower price than the one they agreed upon,then:


A) they both receive a profit of $4 million
B) they both receive a profit of $5 million
C) Alpha receives a profit of $6 million and Beta receives a profit of $3 million
D) Alpha receives a profit of $3 million and Beta receives a profit of $6 million
E) Alpha receives a profit of $20 million and Beta receives a profit of $18 million

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