Answer the next question based on the following payoff matrix for a duopoly. The numbers indicate the profit in thousands of dollars for a high-price or a low-price strategy. Firm X? High PriceLow PriceFirm YHigh priceX = $625X = $725??Y = $625Y = $475?Low priceX = $475X = $400??Y = $725Y = $400Refer to the above payoff matrix. If both firms operate independently and do not collude, the most likely profit is:
A. $725,000 for firm X and $475,000 for firm Y.
B. $400,000 for firm X and $400,000 for firm Y.
C. $625,000 for firm X and $625,000 for firm Y.
D. $475,000 for firm X and $725,000 for firm Y.
Answer: B
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