Question 3 (Jan 2007/08)

(a)Consider the following payoff matrix for duopoly ABC and XYZ.

XYZ's Decision High Price Low Price RM100 billion profit for ABC RM25 billion profit for ABC High Price RM100 billion profit for XYZ RM140 billion profit for XYZ ABC's Decision RM140 billion profit for ABC RM80 billion profit for ABC Low Price RM25 billion profit for XYZ RM80 billion profit for XYZ