If Flashfone prices high, Pictech will make more profit if it chooses a (HIGH OR LOW) price, and if Flashfone prices low, Pictech will make more profit if it chooses a (HIGH OR LOW) price. If Pictech prices high, Flashfone will make more profit if it chooses a (HIGH OR LOW) price, and if Pictech prices low, Flashfone will make more profit if it chooses a (HIGH OR LOW) price. Considering all of the information given, pricing high (IS OR IS NOT) a dominant strategy for both Flashfone and Pictech. If the firms do not collude, what strategies will they end up choosing? Flashfone will choose a high price, and Pictech will choose a low price. Both Flashfone and Pictech will choose a low price. Flashfone will choose a low price, and Pictech will choose a high price. Both Flashfone and Pictech will choose a high price. True or False: The game between Flashfone and Pictech is an example of the prisoners’ dilemma. True False
If Flashfone prices high, Pictech will make more profit if it chooses a (HIGH OR LOW) price, and if Flashfone prices low, Pictech will make more profit if it chooses a (HIGH OR LOW) price. If Pictech prices high, Flashfone will make more profit if it chooses a (HIGH OR LOW) price, and if Pictech prices low, Flashfone will make more profit if it chooses a (HIGH OR LOW) price. Considering all of the information given, pricing high (IS OR IS NOT) a dominant strategy for both Flashfone and Pictech. If the firms do not collude, what strategies will they end up choosing? Flashfone will choose a high price, and Pictech will choose a low price. Both Flashfone and Pictech will choose a low price. Flashfone will choose a low price, and Pictech will choose a high price. Both Flashfone and Pictech will choose a high price. True or False: The game between Flashfone and Pictech is an example of the prisoners’ dilemma. True False
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Suppose there are only two firms that sell smartphones: Flashfone and Pictech. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones.
| Pictech Pricing | |||
| High | Low | ||
| Flashfone Pricing | High | 11, 11 | 2, 18 |
| Low | 18, 2 | 10, 10 |
For example, the lower-left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $18 million, and Pictech will earn a profit of $2 million. Assume this is a simultaneous game and that Flashfone and Pictech are both profit-maximizing firms.
If Flashfone prices high, Pictech will make more profit if it chooses a (HIGH OR LOW) price, and if Flashfone prices low, Pictech will make more profit if it chooses a (HIGH OR LOW) price.
If Pictech prices high, Flashfone will make more profit if it chooses a (HIGH OR LOW) price, and if Pictech prices low, Flashfone will make more profit if it chooses a (HIGH OR LOW) price.
Considering all of the information given, pricing high (IS OR IS NOT) a dominant strategy for both Flashfone and Pictech.
If the firms do not collude, what strategies will they end up choosing?
Flashfone will choose a high price, and Pictech will choose a low price.
Both Flashfone and Pictech will choose a low price.
Flashfone will choose a low price, and Pictech will choose a high price.
Both Flashfone and Pictech will choose a high price.
True or False: The game between Flashfone and Pictech is an example of the prisoners’ dilemma.
True
False
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