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 25.2 Refer to Table 25.2.If firm both firm A and firm B choose their dominant strategies then:

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 25.2  Refer to Table 25.2.If firm both firm A and firm B choose their dominant strategies then:

Quizplus · Accepted Answer

Firm A's dominant strategy is to price at $500 regardless of what Firm B does. Similarly, Firm B's dominant strategy is to price at $200 regardless of what Firm A does. Thus, both firms will price at their dominant strategies and the outcome will be a profit of $50 for Firm A and a profit of $40 for Firm B. Therefore, the correct answer is Choice C.

The Table Below Shows the Payoff (Profit)matrix of Firm a and Firm