According to the figure, The Rock Shop: has more than one dominant strategy.</fo

Question

According to the figure, The Rock Shop:

has more than one dominant strategy.</font> MiiTunes Low Prices High Prices $3 million $5 million Enter -$2 million 4 million The Rock Shop $5 million $10 million Do not enter $0 million $0 million This figure displays the choices and payoffs (company profits) of two music shops-MiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to make a profit at such low prices. The Rock Shop is trying to decide whether or not it should enter the market and compete with MiiTunes. According to the figure, The Rock Shop:

Explanation / Answer

When miitunes chooses to keep price low then Rock Shop does not enter .

When miitunes chooses to keep price high then Rock Shop enters .

Miitunes always chooses to keep price high regardless of what Rock Shop does ( so it is dominant strategy for MIItunes ) . we get this result from the indicated high payoffs .

So here Rock Shop does not have a dominant strategy . it cannot take up any strategy , regardless of what Miitunes does .

Answer : does not have a dominant strategy

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