9. Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smart phones, Flashfone and Pictech. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its phones. Pictech Pricing High Low 10,103,12 12,3 7,7 High Low Flashfone Pricing For example, the lower, left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $12 million and Pictech will earn a profit of $3 million. Assume this is a simultaneous game and that Flashfone and Pictech are both profit-maximizing firms. price, and if Flashfone prices low, Pictech will make more profit if it If Flashfone prices high, Pictech will make more profit if it chooses a chooses a price. price, and if Pictech prices low, Flashfone will make more profit if it If Pictech prices high, Flashfone will make more profit if it chooses a chooses a price. Considering all of the information given, pricing high a dominant strategy for both Flashfone and Pictech. For example, the lower, left cell shows that if Flashfone prices low and Pictech prices high, Flashfone will earn a profit of $12 million and earn a profit of $3 million. Assume this is a simultaneous game and that Flashfone and Pictech are both profit-maximizing firms. price, and if Flashfone prices low, Pictech will make mor If Flashfone prices high, Pictech will make more profit if it chooses a chooses a price. price, and if Pictech prices low, Flashfone will make mor If Pictech prices high, Flashfone will make more profit if it chooses a chooses a price. Considering all of the information given, pricing high a dominant strategy for both Flashfone and Pictech. If the firms do not collude, which strategy will they end up choosing? Flashfone will choose a low price and Pictech will choose a high price. Both Flashfone and Pictech will choose a high price. Flashfone will choose a high price and Pictech will choose a low price. Both Flashfone and Pictech will choose a low price. True or False: The game between Flashfone and Pictech is an example of the prisoners dilemma. True False Grade It Now Grade It Now Save & C Save see Cantin with