Table 2 below represents the payoff matrix for two firms, X and Y, who compete witheach other. Payoffs are in millions of pounds (£) profit. Each firm may choose one of twostrategies i.e. set a high price for its output or set a low price for its output. Neither firmknows what strategy the other will adopt.Table 211.Firm YHigh PriceLow PriceFirm XHigh PriceX-£7mn, Y-£7mnX=£1mn, Y=£15mnLow PriceX-£15mn, Y-£1mnX=£4mn, Y=£4mnIn the absence of collusion, which combination of strategies is most likely to occur?a) X sets a low price and Y sets a low price.b) X sets a high price and Y sets a low price.c) X sets a low price and Y sets a high price.d) X sets a high price and Y sets a high price.

The payoff for two firms is given as Firm XHigh PriceLow PriceFirm YHigh PriceX = 7mn, Y = 7 mnX…

11. Table 2 below represents the payoff matrix for two firms, X and Y, who compete with each other. Payoffs are in millions of pounds (£) profit. Each firm may choose one of two strategies i.e. set a high price for its output or set a low price for its output. Neither firm knows what strategy the other will adopt. Table 2 Firm Y High Price Low Price Firm X High Price X-£7mn, Y-£7mn X-£1mn, Y-£15mn Low Price X-£15mn, Y-£1mn X-£4mn, Y-£4mn In the absence of collusion, which combination of strategies is most likely to occur? a) X sets a low price and Y sets a low price. b) X sets a high price and Y sets a low price. c) X sets a low price and Y sets a high price. d) X sets a high price and Y sets a high price.

11. Table 2 below represents the payoff matrix for two firms, X and Y, who compete with each other. Payoffs are in millions of pounds (£) profit. Each firm may choose one of two strategies i.e. set a high price for its output or set a low price for its output. Neither firm knows what strategy the other will adopt. Table 2 Firm Y High Price Low Price Firm X High Price X-£7mn, Y-£7mn X-£1mn, Y-£15mn Low Price X-£15mn, Y-£1mn X-£4mn, Y-£4mn In the absence of collusion, which combination of strategies is most likely to occur? a) X sets a low price and Y sets a low price. b) X sets a high price and Y sets a low price. c) X sets a low price and Y sets a high price. d) X sets a high price and Y sets a high price.

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 9PA

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