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2. Using a payoff matrix to determine the equilibrium outcome Suppose that Zipride and Citron are the only two firms in a hypothetical market that
2. Using a payoff matrix to determine the equilibrium outcome Suppose that Zipride and Citron are the only two firms in a hypothetical market that produce and sell electric scooters. The following payoff matrix gives profit scenarios for each company (in millions of dollars), depending on whether it chooses to set a high or low price for scooters. Citron Pricing High Low High 11. 11 3, 15 Zipride Pricing Low 15, 3 9, 9 For example, the lower-left cell shows that if Zipride prices low and Citron prices high, Zipride will earn a profit of $15 million, and Citron will earn a profit of $3 million. Assume this is a simultaneous game and that Zipride and Citron are both profit-maximizing firms. If Zipride prices high, Citron will make more profit if it chooses a V price, and if Zipride prices low, Citron will make more profit if it chooses a V price. If Citron prices high, Zipride will make more profit if it chooses a V price, and if Citron prices low, Zipride will make more profit if it chooses a V price. Considering all of the information given, pricing high V a dominant strategy for both Zipride and Citron. If the firms do not collude, what strategies will they end up choosing? O Zipride will choose a high price, and Citron will choose a low price. If Zipride prices high, Citron will make more profit if it chooses a 7 price, and if Zipride prices low, Citron will make more profit if it chooses a V price. If Citron prices high, Zipride will make more profit if it chooses a V price, and if Citron prices low, Zipride will make more profit if it chooses a V price. Considering all of the information given, pricing high V a dominant strategy for both Zipride and Citron. If the firms do not collude, what strategies will they end up choosing? O Zipride will choose a high price, and Citron will choose a low price. 0 Zipride will choose a low price, and Citron will choose a high price. 0 Both Zipride and Citron will choose a low price. 0 Both Zipride and Citron will choose a high price. True or False: The game between Zipride and Citron is not an example of the prisoners' dilemma. 0 True 0 False Grade It Now Save & Continue Continue without saving
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