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Figure: Pricing Strategy in Cable TV Market II
-(Figure: Pricing Strategy in Cable TV Market II)Use Figure: Pricing Strategy in Cable TV Market II.Suppose that,after 1 month,the cable providers follow a tit-for-tat strategy.Eventually,they will achieve a tacit collusive equilibrium at which:
A) both firms set a low price and each earns $90 000.
B) both firms set a high price and each earns $100 000.
C) CableNorth sets a high price and earns $80 000,and CableSouth sets a low price and earns $130 000.
D) CableNorth sets a low price and earns $130 000,and CableSouth sets a high price and earns $80 000.

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Use the following to answer questions :
Figure: Pricing Strategy in Cable TV Market II 
-(Figure: Pricing Strategy in Cable TV Market II)Use Figure: Pricing Strategy in Cable TV Market II.Suppose that,after 1 month,the cable providers follow a tit-for-tat strategy.Eventually,they will achieve a tacit collusive equilibrium at which:
A) both firms set a low price and each earns $90 000. 
B) both firms set a high price and each earns $100 000. 
C) CableNorth sets a high price and earns $80 000,and CableSouth sets a low price and earns $130 000. 
D) CableNorth sets a low price and earns $130 000,and CableSouth sets a high price and earns $80 000.

Quizplus · Accepted Answer

In a tit-for-tat strategy, firms mimic each other's previous actions. This leads to a stable outcome where both firms cooperate by setting high prices, resulting in a tacit collusive equilibrium where each earns $100,000.

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