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
-In Table 15-2,company B's strategy of choosing a _____ price is iteratively dominated by a strategy of _____ price.
A)low;high
B)medium;high
C)medium;low
D)high;low

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 
-In Table 15-2,company B's strategy of choosing a _____ price is iteratively dominated by a strategy of _____ price.
A)low;high 
B)medium;high 
C)medium;low 
D)high;low

Quizplus · Accepted Answer

Company B's strategy of choosing a low price is iteratively dominated by a strategy of choosing a high price because if Company B chooses a low price, Company A will always choose a high price, which will result in a higher profit for Company A. If Company B chooses a high price, Company A will choose a low price, which will result in a higher profit for Company B. Therefore, Company B's strategy of choosing a low price is iteratively dominated by a strategy of choosing a high price.

The Following Payoff Matrix Shows the Profits Accruing to Two