This figure displays the choices and payoffs (company profits) of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to make a profit at such low prices. The Rock Shop is trying to decide whether or not it should enter the market and compete with MiiTunes.According to the figure, MiiTunes:
A. does not have a dominant strategy.
B. has a dominant strategy to charge low prices.
C. has more than one dominant strategy.
D. has a dominant strategy to charge high prices.
Answer: D
You might also like to view...
Property rights
A) are essentially arbitrary. Therefore, rearranging them will have few effects. B) do not really exist except in a capitalist society. C) are a major part of the "rules of the game", which govern economic activity. D) prevent people from cooperating in the most effective way. E) are different from human rights.
A natural monopoly exists when, throughout the range of market demand,
a. average cost is increasing b. there are diseconomies of scale c. average cost is decreasing d. average cost is constant e. marginal cost exceeds average cost
Greater economic efficiency often leads to greater economic inequality.
Answer the following statement true (T) or false (F)
The ease with which assets can be converted to cash for transactions is called
a) convertibility b) liquidity c) float d) seignorage e) the substitution effect