Refer to the following game. $\begin{array}{l}
\quad\quad\quad\quad\quad\text { Firm B }\
\text { Firm A}
\begin{array}{|l|l|l|}
\hline & \text {Low Price } & \text { High Price } \
\hline \text { Low Price } & (9,10) & (8,15) \
\hline \text { High Price } & (7,-10) & (11,11) \
\hline
\end{array}\end{array}$ Which of the following is true?
A) A dominant strategy for firm A is "high price."
B) There does not exist a dominant strategy for firm A.
C) A dominant strategy for firm B is "low price."
D) None of the preceding answers is correct.

Question

Refer to the following game. $\begin{array}{l}
\quad\quad\quad\quad\quad\text { Firm B }\
\text { Firm A}
\begin{array}{|l|l|l|}
\hline & \text {Low  Price } & \text {  High Price } \
\hline \text { Low Price } & (9,10) & (8,15) \
\hline \text { High Price } & (7,-10) & (11,11) \
\hline
\end{array}\end{array}$ Which of the following is true?
A) A dominant strategy for firm A is "high price."
B) There does not exist a dominant strategy for firm A.
C) A dominant strategy for firm B is "low price."
D) None of the preceding answers is correct.

Quizplus · Accepted Answer

A dominant strategy is a strategy that is best for a player regardless of what the other player chooses. Firm A does not have a dominant strategy in this game, because if Firm B chooses low price, Firm A's best response is to choose high price, but if Firm B chooses high price, Firm A's best response is to choose low price. Therefore, Firm A must consider the actions of Firm B in making its decision.

Refer to the Following Game Which of the Following Is True? A) a Dominant Strategy

Refer to the Following Game Which of the Following Is True?
A) a Dominant Strategy