MC Qu. 14-89 (Algo) Refer to the...

The horizontal axis is labeled Y prime's prices. Prices marked on the horizontal axis from left to right: 6 dollars, 5 dollars, and 4 dollars. The vertical axis is labeled X prime's prices. Prices marked on the vertical axis from bottom to top: 5 dollars, 6 dollars, and 7 dollars. The resulting price in the decision matrix are as follows. Cell 1. X, 7 dollars: 16. Y, 6 dollars: 12. Cell 2. X, 7 dollars: 15. Y, 5 dollars: 14. Cell 3. X, 7 dollars: 13. Y, 4 dollars: 15. Cell 4. X, 6 dollars: 19. Y, 6 dollars: 9. Cell 5. X, 6 dollars: 16. Y, 5 dollars: 11. Cell 6. X, 6 dollars: 14. Y, 4 dollars: 13. Cell 7. X, 5 dollars: 18. Y, 6 dollars: 7. Cell 8. X, 5 dollars: 17. Y, 5 dollars: 9. Cell 9. X, 5 dollars: 15. Y, 4 dollars: 10.

Refer to the profits-payoff table for a duopoly. If initially firms X and Y are charging $7 and $6, respectively,

Multiple Choice

• Y would find it advantageous to lower its price if it were certain X would not alter its price.
• Y would find it advantageous to lower its price regardless of whether X alters its price.
• The two firms will be maximizing joint profits.
• both firms would find it advantageous to collude to lower their prices by $1 each.