Exhibit 10-6 Two-Firm Payoff Matrix

Multiple Choice

Exhibit 10-6 Two-Firm Payoff Matrix
-Suppose costs are identical for the two firms in Exhibit 10-6. If both firms assume the other will compete and charge a lower price, equilibrium will be established by:

A) Widget Co. charging the low price and Ajax Co. charging the low price.
B) Widget Co. charging the high price and Ajax Co. charging the low price.
C) Widget Co. charging the low price and Ajax Co. charging the high price.
D) Widget Co. charging the high price and Ajax Co. charging the high price.