Use the table below to answer the following question.
Table 15.2.3

-Refer to Table 15.2.3. Store X and Store Y must decide whether or not to lower their prices. The table gives the economic profit made by Store X and Store Y. Which one of the following observations is correct?
A)Both Store X and Store Y have a dominant strategy of raising their prices.
B)If Store X lowers its prices and Store Y does not, Store X will earn a $20 profit.
C)If Store Y lowers its prices, Store X will be better off not lowering its prices.
D)Both Store X and Store Y would be better off if they could collude and agree to not lower prices.
E)Both Store X and Store Y have a dominant strategy of lowering their prices.

Question

Use the table below to answer the following question.
Table 15.2.3
 
-Refer to Table 15.2.3. Store X and Store Y must decide whether or not to lower their prices. The table gives the economic profit made by Store X and Store Y. Which one of the following observations is correct?
A)Both Store X and Store Y have a dominant strategy of raising their prices. 
B)If Store X lowers its prices and Store Y does not, Store X will earn a $20 profit. 
C)If Store Y lowers its prices, Store X will be better off not lowering its prices. 
D)Both Store X and Store Y would be better off if they could collude and agree to not lower prices. 
E)Both Store X and Store Y have a dominant strategy of lowering their prices.

Quizplus · Accepted Answer

Collusion would allow both stores to maintain higher prices and potentially earn higher profits than if they both lower prices.

Use the Table Below to Answer the Following Question