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Two companies, Acme and Pinnacle, cach decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are puyoffs and they represent annual profits for the two companies. Acme's Decision Good quality Poor quality Pinnacle's profit - S10,000 Pinnacle's profit - $15,00 Good quality "innacle's Acme's profit$10,000 Acme's profit - $6,000 Decision Pinnacle's profit S6,000 Pinnacle's profit -$12.000 Poor quality Acme's profit - $15,000 Acme's profit - $12,000

Two companies, Acme and Pinnacle, cach decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are puyoffs and they represent annual profits for the two companies. Acme's Decision Good quality Poor quality Pinnacle's profit - S10,000 Pinnacle's profit - $15,00 Good quality "innacle's Acme's profit$10,000 Acme's profit - $6,000 Decision Pinnacle's profit S6,000 Pinnacle's profit -$12.000 Poor quality Acme's profit - $15,000 Acme's profit - $12,000

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter11: Price And Output Determination: Monopoly And Dominant Firms
Section: Chapter Questions
Problem 2E: Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one large...
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Question 32 Two companies, Acme and Pinnacle, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies. Acme's Decision Good quality Poor quality Pinnacle's profit - S10,000 Pinnacle's profit - SI5,000 Good quality Acme's profit - $10,000 Acme's profit - S6,000 Pinnacle's Pinnacle's profit - S12,000 Decision Pinnacle's profit - S6,000 Poor quality Acme's profit = $15,000 Acme's profit = $12,000 Which of the following statements is correct? Pinnacle's dominant strategy is to produce Good quality products, but Acme's dominant strategy is to produce Poor quality products. Neither Pinnacle nor Acme have a dominant strategy. Pinnacle's dominant strategy is to produce Poor quality products, but Acme's dominant strategy is to produce Good quality products. The dominant strategy for both companies is to produce Good quality products. O O
Transcribed Image Text:Question 32 Two companies, Acme and Pinnacle, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies. Acme's Decision Good quality Poor quality Pinnacle's profit - S10,000 Pinnacle's profit - SI5,000 Good quality Acme's profit - $10,000 Acme's profit - S6,000 Pinnacle's Pinnacle's profit - S12,000 Decision Pinnacle's profit - S6,000 Poor quality Acme's profit = $15,000 Acme's profit = $12,000 Which of the following statements is correct? Pinnacle's dominant strategy is to produce Good quality products, but Acme's dominant strategy is to produce Poor quality products. Neither Pinnacle nor Acme have a dominant strategy. Pinnacle's dominant strategy is to produce Poor quality products, but Acme's dominant strategy is to produce Good quality products. The dominant strategy for both companies is to produce Good quality products. O O
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