Business, 10.12.2019 19:31 theojw

Tara’s price policy
high low

pam's high $40; $40 $20; $70
price
policy low $70; $20 $30; $30

pam and tara run two competing lemonade stands in a town. in the payoff matrix above, the first entry in each cell shows the profits to pam, and
the second entry in each cell shows the profits to tara.
according to the information, which of the following is true?

(a) if pam sets the high price, tara will do best by charging the low price.
(b) if pam sets the low price, tara will do best by charging the high price.
(c) the dominant strategy for both is to charge the high price.
(d) the dominant strategy for tara is to set the low price and for pam is to set the high price.
(e) neither tara nor pam has a dominant strategy.

Answers: 2

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Tara’s price policy
high low

pam's high $40; $40 $20; $70
price
po...

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