Make or buy decisions affect the degree of vertical integration.
Indicate whether the statement is true or false
Question 2
Bert and Ernie are noncolluding oligopolists. If both choose a high price strategy, each makes 40 in profits; if both choose a low price strategy, each makes 30 in profits. If Bert chooses a high price strategy and Ernie chooses a low price strategy, Bert makes 20 in profits and Ernie makes 60 in profits, while if Bert chooses a low price strategy and Ernie chooses a high price strategy, Bert makes 60 in profits and Ernie makes 20 in profits. Which combination of pricing strategies would you expect Bert and Ernie to adopt if they act independently?
a. Both choose a high price strategy.
b. Both choose a low price strategy.
c. Bert chooses a high price strategy and Ernie chooses a low price strategy.
d. Bert chooses a low price strategy and Ernie chooses a high price strategy.
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