If the firms do not collude, what strategies will they end up choosing? Both Padmania and Capturesque will choose a low price. Padmania will choose a low price, and Capturesque will choose a high price. Both Padmania and Capturesque will choose a high price. Padmania will choose a high price, and Capturesque will choose a low price. True or False: The game between Padmania and Capturesque is not an example of the prisoners' dilemma. True False

Principles of Microeconomics
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ISBN:9781305156050
Author:N. Gregory Mankiw
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Chapter17: Oligopoly
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6. Using a payoff matrix to determine the equilibrium outcome

Suppose there are only two firms that sell tablets: Padmania and Capturesque. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its tablets.
 
 
If the firms do not collude, what strategies will they end up choosing?
Both Padmania and Capturesque will choose a low price.
Padmania will choose a low price, and Capturesque will choose a high price.
Both Padmania and Capturesque will choose a high price.
Padmania will choose a high price, and Capturesque will choose a low price.
True or False: The game between Padmania and Capturesque is not an example of the prisoners' dilemma.
True
False
Transcribed Image Text:If the firms do not collude, what strategies will they end up choosing? Both Padmania and Capturesque will choose a low price. Padmania will choose a low price, and Capturesque will choose a high price. Both Padmania and Capturesque will choose a high price. Padmania will choose a high price, and Capturesque will choose a low price. True or False: The game between Padmania and Capturesque is not an example of the prisoners' dilemma. True False
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