If Zipride prices high, Citron will make more profit if it chooses a price. If Citron prices high, Zipride will make more profit if it chooses a price. Considering all of the information given, pricing low price, and if Zipride prices low, Citron will make more profit if it chooses a If the firms do not collude, what strategies will they end up choosing? price, and if Citron prices low, Zipride will make more profit if it chooses a a dominant strategy for both Zipride and Citron. O Both Zipride and Citron will choose a low price. O Zipride will choose a low price, and Citron will choose a high price. O Zipride will choose a high price, and Citron will choose a low price. O Both Zipride and Citron will choose a high price.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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6. Using a payoff matrix to determine the equilibrium outcome
Suppose that Zipride and Citron are the only two firms in a hypothetical market that produce and sell electric scooters. The following payoff matrix
gives profit scenarios for each company (in millions of dollars), depending on whether it chooses to set a high or low price for scooters.
Zipride Pricing
price.
High
Low
For example, the lower-left cell shows that if Zipride prices low and Citron prices high, Zipride will earn a profit of $13 million, and Citron will earn a
profit of $3 million. Assume this is a simultaneous game and that Zipride and Citron are both profit-maximizing firms.
Citron Pricing
High
9,9
13, 3
If Zipride prices high, Citron will make more profit if it chooses a
Low
If the firms do not lude,
3, 13
6, 6
If Citron prices high, Zipride will make more profit if it chooses a
price.
Considering all of the information given, pricing low
True
False
Both Zipride and Citron will choose a low price.
strategies will they end up choosing?
price, and if Zipride prices low, Citron will make more profit if it chooses a
price, and if Citron prices low, Zipride will make more profit if it chooses a
a dominant strategy for both Zipride and Citron.
Zipride will choose a low price, and Citron will choose a high price.
O Zipride will choose a high price, and Citron will choose a low price.
Both Zipride and Citron will choose a high price.
True or False: The game between Zipride and Citron is an example of the prisoners' dilemma.
Transcribed Image Text:6. Using a payoff matrix to determine the equilibrium outcome Suppose that Zipride and Citron are the only two firms in a hypothetical market that produce and sell electric scooters. The following payoff matrix gives profit scenarios for each company (in millions of dollars), depending on whether it chooses to set a high or low price for scooters. Zipride Pricing price. High Low For example, the lower-left cell shows that if Zipride prices low and Citron prices high, Zipride will earn a profit of $13 million, and Citron will earn a profit of $3 million. Assume this is a simultaneous game and that Zipride and Citron are both profit-maximizing firms. Citron Pricing High 9,9 13, 3 If Zipride prices high, Citron will make more profit if it chooses a Low If the firms do not lude, 3, 13 6, 6 If Citron prices high, Zipride will make more profit if it chooses a price. Considering all of the information given, pricing low True False Both Zipride and Citron will choose a low price. strategies will they end up choosing? price, and if Zipride prices low, Citron will make more profit if it chooses a price, and if Citron prices low, Zipride will make more profit if it chooses a a dominant strategy for both Zipride and Citron. Zipride will choose a low price, and Citron will choose a high price. O Zipride will choose a high price, and Citron will choose a low price. Both Zipride and Citron will choose a high price. True or False: The game between Zipride and Citron is an example of the prisoners' dilemma.
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