Flashtech and Pictone are both profit-maximizing firms. There are only two firms

Question

Flashtech and Pictone are both profit-maximizing firms.

There are only two firms that sellcamera phones, Flashtech and Pictone. The payoff matrix below showsthe profits (in millions of dollars) each company will earndepending on whether it sets a high or low price for its phones.For example, the lower-left cell shows that if Flashtech prices lowand Pictone prices high, Flashtech will earn a profit of $10million and Pictone will earn a profit of $3 million.

Pictone High Price Low Price Flashtech   High Price    8 , 8 3 , 10 Low Price    10 , 3 5 , 5

Flashtech and Pictone are both profit-maximizing firms.

Explanation / Answer

if Pictone prices high, Flashtech will earn 5 millions bypricing low which is higher than wat it will earn if it priceshigh( 3 millions) if Pictone prices low, Flashtech will earn 10 millions bypricing low which is higher than what it can earn if it priceshigh( which is millions)

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