Table: Two Rival Gas Stations Speedy Gas High Price. Low Price $100, $100 $150, $25 High Price $25, $150 Swifty Gas Low Price $50, $50 Look at the table Two Rival Gas Stations, which shows a payoff matrix for two gas stations in a small town. Each firm can set either a high price or a low price, and customers view these two firms as nearly perfect substitutes. Profits in each cell of the payoff matrix are given as (Swifty, Speedy). If both firm know that they will play the same game repeatedly for many time, both of them will choose tit-for-tat strategy. After they play the game for 10 times, what will be the Speedy Gas's total payoff for the 10 times: O $100 O $500 O $1500 O $150 O None of these options is correct.

Table: Two Rival Gas Stations Speedy Gas High Price. Low Price $100, $100 $150, $25 High Price $25, $150 Swifty Gas Low Price $50, $50 Look at the table Two Rival Gas Stations, which shows a payoff matrix for two gas stations in a small town. Each firm can set either a high price or a low price, and customers view these two firms as nearly perfect substitutes. Profits in each cell of the payoff matrix are given as (Swifty, Speedy). If both firm know that they will play the same game repeatedly for many time, both of them will choose tit-for-tat strategy. After they play the game for 10 times, what will be the Speedy Gas's total payoff for the 10 times: O $100 O $500 O $1500 O $150 O None of these options is correct.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 8PA

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