Exhibit 10.9

-Refer to Exhibit 10.9.Suppose Firm A and Firm B are a duopoly in this market and the matrix shows the profit expected for different strategies.If both charge the low price and split the market,then each firm earns _____ profit a day.

Question

Exhibit 10.9
 
-Refer to Exhibit 10.9.Suppose Firm A and Firm B are a duopoly in this market and the matrix shows the profit expected for different strategies.If both charge the low price and split the market,then each firm earns _____ profit a day.

Quizplus · Accepted Answer

If both firms charge the low price ($20), they will split the market and earn a profit of $50 each per day ($100 total profit). This is the highest profit each firm can earn as any other strategy would result in one or both of the firms earning a lower profit. Therefore, the best choice for both firms is to charge the low price and split the market.

Exhibit 10.9 -Refer to Exhibit 10.9.Suppose Firm a and Firm B Are