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 dominant strategy for CableSouth:
A)is to charge a high price.
B)is to charge a low price.
C)is to charge what CableNorth does.
D)does not exist.

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 dominant strategy for CableSouth:
A)is to charge a high price. 
B)is to charge a low price. 
C)is to charge what CableNorth does. 
D)does not exist.

Quizplus · Accepted Answer

The dominant strategy for CableSouth is to charge a low price. This is because if CableNorth charges a low price, then CableSouth's profits will be maximized by also charging a low price. If CableNorth charges a high price, CableSouth can still maximize profits by undercutting them with a lower price. Therefore, charging a low price is the best strategy for CableSouth in this scenario.

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