Homework: HW7 Score: 0 of 1 pt Concept: Duopoly Game 2 Consider a market with tw

Question

Homework: HW7 Score: 0 of 1 pt Concept: Duopoly Game 2 Consider a market with two firms, Target and Wal-Mart, that sell CDs in their music department. Both stores -keley 12/4/17 12:11 I5 of 50 (12completel HYV Score: 23%, 11.5 must choose whether to charge a high price (320) or a low price ($13) for the new Miley Cyrus CD. These price strategies with corresponding profits are depicted in the payoff matrix to the right. Targets Question H profits are in red and Wal-Mart's are in b in blue. Tapers dominant strategy is to pick a price of S0 Target Price $20 Price $13 1,500 Price $20 Wal -Mar Price $13 10.000 $13 $1.500 $4 3 Clear All

Explanation / Answer

Dominant strategy is a strategy which a player plays irrespective of what other player plays.

Thus Target dominant strategy is to charge a price of $13.

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