Exhibit 10-5 Two-Firm Payoff Matrix

Multiple Choice

Exhibit 10-5 Two-Firm Payoff Matrix
-Assume costs are identical for the two firms in Exhibit 10-5. If both firms were allowed to form a cartel and agree on their prices, equilibrium would be established by:

A) Beta Co. charging $1,000 and Alpha Co. charging $1,000.
B) Beta Co. charging $1,000 and Alpha Co. charging $500.
C) Beta Co. charging $500 and Alpha Co. charging $500.
D) Beta Co. charging $500 and Alpha Co. charging $1,000.