Business, 06.05.2020 08:36 Dezshanae4352

Two firms, A and B, must each choose either a low price or a high price for their product. The payoff matrix shows the profit each firm would make with the various price combinations. Profits are in millions of dollars, and Firm A's profit is on the left and Firm B's profit is on the right side of each cell.

Firm B
Low price
High price

Firm A
Low price
5, 6
8, 4
High price
3, 8
7, 7
If the firms cannot cooperate with each other and must choosesimultaneously, what price will they choose?

A. Both firms will choose the low price.
B. Firm A will choose the low price and Firm B will choose the high price.
C. Both firms will choose the high price.
D. Firm A will choose the high price and Firm B will choose the low price.

If the firms could cooperate with each other, what price would they choose?
A. Both firms would choose the low price.
B. Both firms would choose the high price.
C. Firm A would choose the low price and Firm B would choose the high price.
D. Firm A would choose the high price and Firm B would choose the low price

Answers: 3

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