Exhibit 10-5 Two-Firm Payoff Matrix

Multiple Choice

Exhibit 10-5 Two-Firm Payoff Matrix
-Suppose costs are identical for the two firms in Exhibit 10-5. If both firms assume the other will compete and charge a lower price, equilibrium will 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.