The following payoff matrix shows the profits accruing to two firms,Company A and Company B,under different pricing strategies.In each cell,the figure on the left indicates Company A's payoff and the figure on the right indicates Company B's payoff.
Table 15-2
-Refer to Table 15-2.Which of the following is true?
A)Company A's dominant strategy is to set a high price.
B)Company A's dominant strategy is to set a medium price.
C)Company A's dominant strategy is to set a low price.
D)Company A does not have a dominant strategy.

Question

The following payoff matrix shows the profits accruing to two firms,Company A and Company B,under different pricing strategies.In each cell,the figure on the left indicates Company A's payoff and the figure on the right indicates Company B's payoff.
Table 15-2 
-Refer to Table 15-2.Which of the following is true?
A)Company A's dominant strategy is to set a high price. 
B)Company A's dominant strategy is to set a medium price. 
C)Company A's dominant strategy is to set a low price. 
D)Company A does not have a dominant strategy.

Quizplus · Accepted Answer

A dominant strategy is one that results in the highest payoff for a player, no matter what the other player does. If Company A's best choice depends on what Company B does, then Company A does not have a dominant strategy.

The Following Payoff Matrix Shows the Profits Accruing to Two