Author Question: The following table shows the annual profits of two pottery manufacturers. At present they both ... (Read 32 times)

nmorano1 · **on:** May 25, 2020

The following table shows the annual profits of two pottery manufacturers. At present they both charge €20.00 for a teapot. Their annual profits are shown in cell A in the following table. The other cells show the effects on their profits of one or the other firm or both firms reducing their price to €19.00.

	Gary Potter: €20.00	Gary Potter: €19.00
Topotz: €20.00	A €24m each	B €8m for Topotz €32m for Gary Potter
Topotz: €19.00	C €36m for Topotz €12m for Gary Potter	D €16m each

Assuming no collusion between the two firms, which of the following is correct?
◦ Both firms will keep the price at €20.00.
◦ Gary Potter will keep its price at €20.00 and Topotz will reduce its price to €19.00.
◦ Gary Potter will reduce its price to €19.00 and Topotz will keep its price at €20.00.
◦ Both firms will reduce price to €19.00.

Perkypinki · **Reply #1 on:** May 25, 2020

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