Question 1
Refer to the information provided in Table 14.1 below to answer the question that follows.
Refer to Table 14.1. Firm Aʹs optimal strategy is
◦ to not raise the price of its product.
◦ to raise the price of its product.
◦ dependent on what Firm B does.
◦ indeterminate from this information, as no information is provided on Firm Aʹs risk preference.
Question 2
Refer to the information provided in Table 14.1 below to answer the question that follows.
Refer to Table 14.1. The Nash equilibrium in the game is ________.
◦ (Raise Price, Don't Raise Price)
◦ (Don't Raise Price, Raise Price)
◦ (Don't Raise Price, Don't Raise Price)
◦ Both (Raise Price, Don't Raise Price) and (Don't Raise Price, Raise Price) are correct.
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