8. Explain the general meaning of the profit payoff matrix at the top of the next column for oligopolists X and Y. All profit figures are in thousands. LO4

a. Use the payoff matrix to explain the mutual interdependence that characterizes oligopolistic industries.

b. Assuming no collusion between X and Y, what is the likely pricing outcome?

c. In view of your answer to 8b, explain why price collusion is mutually profitable. Why might there be a temptation to cheat on the collusive agreement?

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Y's Possible prices $40 $35 $40 X's Possible prices $35 A $57 B $59 $60 C $50 $69 $58 $55 $55