Stephanie Santos
New member
...Pictech. The payoff matrix......? below shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. For example, the lower left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $9 million and Pictech will earn a profit of $5 million.
Flashfone and Pictech are both profit-maximizing firms.
Pictech high price = 7, 9
Flashfone high price = 7, 5
Pictech low price = 5, 6
Flashfone low price = 9, 6
If Flashfone prices high, Pictech makes more profit if it chooses a ______________
a) low price
b) high price
and if Flashprices low, Pictech makes more profit if it chooses a ______________
a) high price
b) low price
If Pictech prices high, Flashfone makes more profit if it chooses a ________________
a) high price
b) low price
and if Pictech prices low, Flashfone makes more profit if it chooses a ____________
a) low price
b) high price
Given all of the information above, pricing low _______________
a) is not
b) is
a dominant strategy for both Flashfone and Pictech.
If the firms do not collude, what strategies will they end up choosing?
a) Flashfone will choose a higher price and Pictech will choose a low price
b) Both Flashfone and Pictech will choose a low price
c) Both Flashfone and Pictech will choose a high price
d) Flashfone will choose a low price and Pictech will choose a high price
True or false: The game between Flashfone and Pictech is an example of the prisoners' dilemma
a) false
b) true
Flashfone and Pictech are both profit-maximizing firms.
Pictech high price = 7, 9
Flashfone high price = 7, 5
Pictech low price = 5, 6
Flashfone low price = 9, 6
If Flashfone prices high, Pictech makes more profit if it chooses a ______________
a) low price
b) high price
and if Flashprices low, Pictech makes more profit if it chooses a ______________
a) high price
b) low price
If Pictech prices high, Flashfone makes more profit if it chooses a ________________
a) high price
b) low price
and if Pictech prices low, Flashfone makes more profit if it chooses a ____________
a) low price
b) high price
Given all of the information above, pricing low _______________
a) is not
b) is
a dominant strategy for both Flashfone and Pictech.
If the firms do not collude, what strategies will they end up choosing?
a) Flashfone will choose a higher price and Pictech will choose a low price
b) Both Flashfone and Pictech will choose a low price
c) Both Flashfone and Pictech will choose a high price
d) Flashfone will choose a low price and Pictech will choose a high price
True or false: The game between Flashfone and Pictech is an example of the prisoners' dilemma
a) false
b) true