Table 14-2 shows the payoff matrix for Wal-Mart and Target from every combinatio
ID: 1221421 • Letter: T
Question
Table 14-2 shows the payoff matrix for Wal-Mart and Target from every combination of pricing strategies for th popular PlayStation 3. At the start of the game each firm charges a low price and each earns a profit of $7,000. Refer to Table 14-2. For each firm, is there a better outcome than the current situation in which each firm charges the low price and earns a profit of $7,000? No, any other strategy hurts consumers. Yes, the firms can implicitly collude and agree to charge a higher price. Yes, each firm can implicitly agree to increase output and not to deviate from a low price. No, there is no incentive for each firm to consider any other strategy. If another worker is hired with a marginal product greater than the previously hired worker, which of the following will be true? average fixed costs will increase fixed costs will decrease marginal cost will decrease total costs will decrease marginal cost will increase If perfectly competitive lawn care firms are making an economic profit, then the firms must be superior and will continue to make an economic profit. wages will be bid up until the economic profit are gone. new firms will enter the industry. they are not equating marginal revenue to marginal cost. government regulation will be imposed to decrease their profit.Explanation / Answer
4. Yes, firms can implicitly collude and agree to charge a higher price.
5 Marginal Cost will decrease
6 New firm will enter the industry
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