Use the following table to answer the question : Table 14-3 : represents the payoff matrix of firms A and B,when they choose to produce either high output or low output.In each cell,the figure on the left indicates Firm B's payoffs and the figure on the right indicates Firm A's payoffs.

-Given the information in Table 14-3,if X = 10 and Y = 15,which firm has a dominant strategy?
A)Firm A
B)Firm B
C)Both Firm A and Firm B
D)Neither Firm A nor Firm B

Question

Use the following table to answer the question : Table 14-3 : represents the payoff matrix of firms A and B,when they choose to produce either high output or low output.In each cell,the figure on the left indicates Firm B's payoffs and the figure on the right indicates Firm A's payoffs.

-Given the information in Table 14-3,if X = 10 and Y = 15,which firm has a dominant strategy?

-Given the information in Table 14-3,if X = 10 and Y = 15,which firm has a dominant strategy?
A)Firm A 
B)Firm B 
C)Both Firm A and Firm B 
D)Neither Firm A nor Firm B

Quizplus · Accepted Answer

To determine the dominant strategy, we need to compare the payoffs for each firm in each possible scenario. 
If Firm A chooses high output (H), they will earn 10 if Firm B chooses H and 30 if Firm B chooses L. If Firm A chooses low output (L), they will earn 15 if Firm B chooses H and 25 if Firm B chooses L.
If Firm B chooses high output (H), they will earn 20 if Firm A chooses H and 15 if Firm A chooses L. If Firm B chooses low output (L), they will earn 25 if Firm A chooses H and 20 if Firm A chooses L.
Since Firm B's payoff is always higher when they choose low output, regardless of what Firm A chooses, Firm B has a dominant strategy of choosing low output. Therefore, the answer is B.

Use the Following Table to Answer the Question : Table