122 .III 4? E]: Done LESSON 4 Assignment D) each player is misinformed about the decision that has been made by the other player. 24) Predatory pricing is used primarily to: A) reduce (limit) the profits of all of the firms in the industry. B) discourage new firms from entering a market. 8) drive other firms out of a market. D) establish a minimum price all of the firms in the market will charge. 25) IWhich of the following is not an example of a practice that facilitates 'tacit collusion"? A) Uniform prices charged by the firms in a particular industry. B) Advance notice of price changes by one or more of the firms in an industry. 8) The use of most-favored-customer clauses. D) The formation of a cartel. Table 9-2 "mt-amn w: stoma pull w: \"boom: 1': 81m mi 1:314.\" MI wt sumo wall If. 57mm 1': m min 1': {rm mil Table 13-2 shows the payoff matrix for Wal-Mart and Target from every combination of pricing strategies for the popular PlayStatioml. At the start of the game each firm charges a low price and each earns a profit of $7.000. 26) Refer to Table 9-2. Is the current strategy in which each firm charges the low price and earns a profit of \".000 a Nash equilibrium? If not. why and what is the Nash equilibrium? A) No, it is not a Nash equilibrium because each firm can do better by charging the high price. The Nash equilibrium occurs when each firm charges the high price and earns a profit of 810.000. B) Yes. the current situation is a Nash equilibrium. C) No. the current situation is not a Nash equilibrium. The Nash equilibrium for each firm is to have the other charge a high price and for the firm in question charge a low price. D) No, the current situation is not a Nash equilibrium: it is a dominant strategy equilibrium. There is no Nash equilibrium in this game. 2?) Refer to Table 9-2. For each firm. is there a better outcome than the current situation in which each firm charges the low price and earns a profit of 57.000? A) Yes. the firms can implicitly collude and agree to charge a higher price. B) Yes. each firm can implicitly agree to increase output and not to deviate from a low price. C) No. there is no incentive for each firm to consider any other strategy. D) No. any other strategy hurts consumers