19. The market for bagels contains two firms: BagelWorld (BW) and Bagels\'R\'Us

Question

19. The market for bagels contains two firms: BagelWorld (BW) and Bagels'R'Us (BRU). The owners of the two firms decide to fix the price of bagels. The table below shows how each firm's profit (in dollars) depends on whether they abide by the agreement or cheat on the agreement. Bagel World Cheat Abide 40 for BRU 40 for BW 80 for BRU Cheat O for BW Bagels'R'Us 0 for BRU 45 for BRU 80 for BW 45 for BW Abide For Bagel World, is a abiding by the agreement dominant strategy o cheating on the agreement dominated strategy O cheating on the agreement, dominant strategy O abiding by the agreement dominant strategy when Bagels'R'Us also abides

Explanation / Answer

dominant strategy is the one that one economic player opts for irrespective of what the other player is opting for,

here cheating is such kind of dominating strategy for bagel world

so answer is C

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