(Figure: Payoff Matrix for Alex and Sybil) Use Figure: Payoff Matrix for Alex and Sybil. Alex and Sybil are the only producers of frozen yogurt in their town. Every week, each decides how much frozen yogurt to produce for the following week. The figure shows the profit per week earned by their two firms. The BEST response for Alex is:

A)low output.
B)high output.
C)low output when Sybil produces a low output.
D)low output when Sybil produces a high output.

Question

(Figure: Payoff Matrix for Alex and Sybil) Use Figure: Payoff Matrix for Alex and Sybil. Alex and Sybil are the only producers of frozen yogurt in their town. Every week, each decides how much frozen yogurt to produce for the following week. The figure shows the profit per week earned by their two firms. The BEST response for Alex is:
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A)low output. 
B)high output. 
C)low output when Sybil produces a low output. 
D)low output when Sybil produces a high output.

Quizplus · Accepted Answer

The best response for Alex is to produce a high output regardless of what Sybil does. This is because producing a high output results in the highest profit for Alex in both scenarios where Sybil produces a high or low output. Therefore, the best choice for Alex is to produce a high output.