Refer to the following game. 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 answers is correct.

Question

Refer to the following game.  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 answers is correct.

Quizplus · Accepted Answer

In this game, we can see that neither firm A nor firm B has a dominant strategy. A dominant strategy is a strategy that yields the highest payoff for a player regardless of the other players' strategies. However, in this game, the payoff of each firm is dependent on the strategy of the other. Hence, neither firm has a dominant strategy. Therefore, the correct answer is B.

Refer to the Following Game