(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 Sybil is:

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

Quizplus · Accepted Answer

The best response for Sybil is to produce a high output regardless of what Alex produces. This is because regardless of whether Alex produces a high or low output, Sybil's profit is maximized by producing a high output.