Using the following payoff table for Hardaway Corporation and Paxton Industries.

Question

Using the following payoff table for Hardaway Corporation and Paxton Industries. These two firms must make simultaneous pricing decisions. They can choose low, medium, or high prices. The payoffs given are in thousands of dollars of profit per month. For the simultaneous pricing decision facing Hardaway Corporation and Paxton Industries,

Question 1 options: cell I is a strategically stable pricing outcome. cell A is the likely outcome of the pricing decision. cell E is the equilibrium pricing decision. both firms pricing low is a Nash equilibrium. both b and d.

When participants in a game choose to take actions that represent a Nash equilibrium,

Question 2 options: no single participant has an incentive to change its action. each participant has chosen the best action possible, given what the others have chosen. no other set of actions could make ALL participants better off. both a and b. all of the above.

Profits are interdependent in oligopoly markets because

Question 3 options: products are differentiated. managers are trying to set prices cooperatively in order to maximize total industry profit. entry into the market is restricted by some form of entry barrier. each firm in the market is relatively large. all of the above.

Paxton Industries Medium $45, $20 $40, S40 $38, S52 High $32, $20 $45, S35 $50, S50 Low Low $30, $30 $20, S45 $15, $48 Hardaway Corp. Medium High Payoffs in thousands of dollars of monthly profits.

Explanation / Answer

Answer 3:

.All the options represent characteristics of oligopoly. Thus, all of the above is the answer. Profits are interdependent because the number of firms in the market are less and each firm is relatively large. so, they try to collude to maximize their total profits.

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