Two rival oligopolists in the coffee industry. Wide Awake and Zuma, have to decide on their pricing strategy. Each can choose either a high price or a low price. The payoff matrix shows the profits that each firm can expect to earn depending on the pricing strategy it adopts. If the firms act out of individual self-interest, which prices will they select? A. Both firms will select a high price. OB. Zuma will select a low price and Wide Awake will select a high price. OC. Both firms will select a low price. O D. Zuma will select a high price and Wide Awake will select a low price. Zuma ("Z") High price High price $3 million "Z earns Wide Awake ("W") Low Zearns price $4 million "W" earns $3 million "W" earns $1 million Low price Z earns $1 million Z earns $2 million "W" earns $4 million "W" earns $2 million
Two rival oligopolists in the coffee industry. Wide Awake and Zuma, have to decide on their pricing strategy. Each can choose either a high price or a low price. The payoff matrix shows the profits that each firm can expect to earn depending on the pricing strategy it adopts. If the firms act out of individual self-interest, which prices will they select? A. Both firms will select a high price. OB. Zuma will select a low price and Wide Awake will select a high price. OC. Both firms will select a low price. O D. Zuma will select a high price and Wide Awake will select a low price. Zuma ("Z") High price High price $3 million "Z earns Wide Awake ("W") Low Zearns price $4 million "W" earns $3 million "W" earns $1 million Low price Z earns $1 million Z earns $2 million "W" earns $4 million "W" earns $2 million
Chapter8: Game Theory
Section: Chapter Questions
Problem 8.3P
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