Asked by Megan Chung on Jun 11, 2024
Verified
What is the best response of firm B,given firm A is charging a low price?
A) Charge a low price
B) Charge a high price
C) Charge zero,give the good away
D) All of the above
Simultaneous-Move Game
A strategic interaction where all players make their decisions or moves at the same time without knowledge of the other players' choices.
Low Price
The situation or strategy where the cost of a good or service is set below the average market price to attract consumers or gain market share.
- Scrutinize the tactics applied in strategic games featuring both iterative and simultaneous moves.
Verified Answer
VH
Vanessa HowardJun 13, 2024
Final Answer :
A
Explanation :
The best response for firm B, given that firm A is charging a low price, is to also charge a low price. This strategy helps firm B remain competitive in the market by attracting price-sensitive customers and preventing them from losing market share to firm A. Charging a high price would make firm B's products less attractive compared to firm A's cheaper offerings, and giving the product away for free is not sustainable in the long term.
Learning Objectives
- Scrutinize the tactics applied in strategic games featuring both iterative and simultaneous moves.