The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2

-The greater the consumer's reluctance to shift brands, the lower the price elasticity of demand.

Question

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2
 
-The greater the consumer's reluctance to shift brands, the lower the price elasticity of demand.

Quizplus · Accepted Answer

This statement is true. When consumers are less likely to switch to a different brand, they are less sensitive to changes in price, resulting in a lower price elasticity of demand. This means that firms may have more pricing power and can charge higher prices without losing a significant amount of customers.

The Table Below Shows the Payoff (Profit) Matrix of Firm