Question

Suppose two firms are in a game​ situation, and they each must decide on a strategy regarding whether to select a high price or a low price. Profits for a firm are highest when it selects a low​ price, while the other selects a high​ price; profits are lowest if one selects a high​ price, while the other selects a low​ price; profits are in between when both select low​ prices; and profits are slightly higher when both select high prices. In the absence of collusion we expect:________

Answer 1

Answer: Both to select low prices.

Explanation:

One of the vital goal of doing business is profit irrespective of the firm. Every business has to deal with funds and when funds is involved profit has to be made even while serving the client in satisfying conditions. The profit enables the firm to be ran smoothly; it's operations and have a reason to be said that their in business. Every firm ooks out for opportunities to make rofit while giving their best. According to the paragraph profits are high when the price of the commodity is reduced, each firm will reduce it's pricing to ensure they make profit.