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Refer to the Normal-Form Game of Price Competition in the Payoff

Question 13

Multiple Choice

Refer to the normal-form game of price competition in the payoff matrix below.  Firm B  Firm A Low Price  High Price  Low Price 0,050,10 High Price 10,5020,20\begin{array}{c}\text { Firm B }\\\text { Firm A}\begin{array}{|l|l|l|} \hline & \text { Low Price } & \text { High Price } \\\hline & & \\\text { Low Price } & 0,0 & 50,-10 \\\hline & & \\\text { High Price } & -10,50 & 20,20\\\hline\end{array}\end{array} Suppose that firm A deviates from a trigger strategy to support a high price.What is the present value of A's payoff from cheating?


A) 70
B) 50
C) 30
D) 20

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