Refer to the above payoff matrix.Assume that firm B adopts a low-price strategy while firm A maintains a high-price strategy.Compared to the results from a high-price strategy for both firms,firm B will now:
A) lose $75 million in profit and firm A will gain $50 million in profit.
B) gain $50 million in profit and firm A will lose $50 million in profit.
C) gain $75 million in profit and firm A will lose $50 million in profit.
D) gain $50 million in profit and firm A will lose $75 million in profit.
The high-price strategy results in $500 million profits for both.If B adopts a low-price strategy and A stays with the high-price strategy,B will gain and A will lose.
Correct Answer:
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