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Consider a market with two firms, Target and Wal-Mart, that sell CDs in their music department. Both stores must choose whether to charge a high price ($30) or a low price ($17) for the new Miley Cyrus CD. These price strategies with corresponding profits are depicted in the payoff matrix. Target's profits are in red and Wal-Mart's are in blue. Target's dominant strategy is to pick a price of $ C O 2 Target Price = $30 Price = $17 $7,000 $1,000 Price = $30 $7,000 $12,000 Wal-Mart $12,000 $4,000 Price = $17 $1,000 $4,000

Consider a market with two firms, Target and Wal-Mart, that sell CDs in their music department. Both stores must choose whether to charge a high price ($30) or a low price ($17) for the new Miley Cyrus CD. These price strategies with corresponding profits are depicted in the payoff matrix. Target's profits are in red and Wal-Mart's are in blue. Target's dominant strategy is to pick a price of $ C O 2 Target Price = $30 Price = $17 $7,000 $1,000 Price = $30 $7,000 $12,000 Wal-Mart $12,000 $4,000 Price = $17 $1,000 $4,000

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter15: Oligopoly And Strategic Behavior
Section: Chapter Questions
Problem 15P
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Consider a market with two firms, Target and Wal-Mart, that sell CDs in their music department. Both stores must choose whether to charge a high price ($30) or a low price ($17) for the new Miley Cyrus CD. These price strategies with corresponding profits are depicted in the payoff matrix. Target's profits are in red and Wal-Mart's are in blue. Target's dominant strategy is to pick a price of $ C O 2 Target Price = $30 Price = $17 $7,000 $1,000 Price = $30 $7,000 $12,000 Wal-Mart $12,000 $4,000 Price = $17 $1,000 $4,000
Transcribed Image Text:Consider a market with two firms, Target and Wal-Mart, that sell CDs in their music department. Both stores must choose whether to charge a high price ($30) or a low price ($17) for the new Miley Cyrus CD. These price strategies with corresponding profits are depicted in the payoff matrix. Target's profits are in red and Wal-Mart's are in blue. Target's dominant strategy is to pick a price of $ C O 2 Target Price = $30 Price = $17 $7,000 $1,000 Price = $30 $7,000 $12,000 Wal-Mart $12,000 $4,000 Price = $17 $1,000 $4,000
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