Asked by Brianna Ellis on Jul 17, 2024
Verified
What is the best response of firm A,given firm B is charging a High Price?
A) Charge a low price
B) Charge a high price
C) Charge zero,give the good away
D) All of the above
Simultaneous-Move Game
A strategic scenario in game theory where all players make their decisions or choose their actions at the same time without knowledge of the other players' choices.
High Price
High price indicates a scenario where the cost of a good or service is considered greater than usual or compared to its competitors.
- Assess the strategic dynamics present in games with both cyclical and simultaneous-moving elements.
Verified Answer
HK
Holly KovalJul 24, 2024
Final Answer :
A
Explanation :
In a simultaneous-move game, both firms make their decisions simultaneously without knowing the decision of the other firm. If firm B charges a high price, firm A's best response is to charge a low price. This is because charging a high price will result in losing customers to firm B, and charging zero is not a profitable strategy. Therefore, the best response of firm A is to charge a low price. Option B and C are not the best choices. Option D is incorrect as not all the options are the best response.
Learning Objectives
- Assess the strategic dynamics present in games with both cyclical and simultaneous-moving elements.