-Figure 11-13 shows the payoff matrix for the only two auto dealerships in a community,Jim's Autos and Tim's Autos.The matrix shows the profits that each firm would earn from choosing either a low price or a high price.In this example,
A)both firms would be best off if they charged a low price
B)there is no equilibrium to the market
C)both firms would be best off if they charged a high price
D)both firms will go out of business in the long run
E)the market is more efficient than a perfectly competitive market

Question

-Figure 11-13 shows the payoff matrix for the only two auto dealerships in a community,Jim's Autos and Tim's Autos.The matrix shows the profits that each firm would earn from choosing either a low price or a high price.In this example,
A)both firms would be best off if they charged a low price 
B)there is no equilibrium to the market 
C)both firms would be best off if they charged a high price 
D)both firms will go out of business in the long run 
E)the market is more efficient than a perfectly competitive market

Quizplus · Accepted Answer

Both firms would be best off if they charged a high price because it would likely lead to higher profits for both, assuming the payoff matrix indicates higher profits for both firms when they choose high prices.

-Figure 11-13 Shows the Payoff Matrix for the Only Two