Table 11-7 Table 11-7 Shows the Payoff Matrix for Walmart

Table 11-7
Table 11-7 shows the payoff matrix for Walmart and Target from every combination of pricing strategies for the popular PlayStation 4. At the start of the game each firm charges a low price and each earns a profit of $7,000.
-Refer to Table 11-7.Suppose Walmart and Target both advertise that they will match the lowest price offered by any competitor.What is the purpose of such a strategy?

A) to signal to each other not to charge below the current low price
B) to signal to each other that they will not hesitate to initiate a price war
C) to signal to each other that they intend to charge the high price
D) to signal to each other to share the market equally

Correct Answer:

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