Suppose there are only two firms that sell blu-ray players, Movietonia and Video

Question

Suppose there are only two firms that sell blu-ray players, Movietonia and Videotech. The following payoff matrix shows the profit (m millions of dollars) each company will earn, depend og on whether it sets a high or low price for its players. for example, the lower-left cell shows that if Movietorea prices low and Videojet pens high, Movietonia will earn a profit of $18 million and Videotech will earn a profit of $2 million. Assume this is a simultaneous game and that Movietonia and Videotech are both profit maximizing firms.

Explanation / Answer

1) low (18),low (18)

2)low (18),low (18)

3) $11 , 11

4) both choose a low price

5) true

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