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Figure: Pricing Strategy in Cable TV Market II
-(Figure: Pricing Strategy in Cable TV Market II)Use Figure: Pricing Strategy in Cable TV Market II.The noncooperative equilibrium in the cable TV market occurs when:
A)CableNorth sets a high price and earns $80,000,and CableSouth sets a low price and earns $130,000.
B)CableNorth sets a low price and earns $130,000,and CableSouth sets a high price and earns $80,000.
C)both firms set a low price and each earns $90,000.
D)both firms set a high price and each earns $100,000.

Question

Use the following to answer question:
Figure: Pricing Strategy in Cable TV Market II 
-(Figure: Pricing Strategy in Cable TV Market II)Use Figure: Pricing Strategy in Cable TV Market II.The noncooperative equilibrium in the cable TV market occurs when:
A)CableNorth sets a high price and earns $80,000,and CableSouth sets a low price and earns $130,000. 
B)CableNorth sets a low price and earns $130,000,and CableSouth sets a high price and earns $80,000. 
C)both firms set a low price and each earns $90,000. 
D)both firms set a high price and each earns $100,000.

Quizplus · Accepted Answer

In a noncooperative equilibrium, both firms choose strategies that maximize their own payoff without cooperating. When both firms set a low price, they each earn $90,000, which is the Nash equilibrium where neither firm can benefit by unilaterally changing their strategy.

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