Consider the Following Game in Which Two Firms Decide How

question 136

Multiple Choice

Consider the following game in which two firms decide how much of a homogeneous good to produce. The annual profit payoffs for each firm are stated in the cell of the game matrix, and Firm A's payoffs appear first in the payoff pairs: What is the Nash equilibrium for this game?

• A) Both firms producer low levels of output.
• B) Both firms produce high levels of output.
• C) Firm A produces low levels of output, and Firm B produces high output.
• D) Firm A produces high levels of output, and Firm B produces low output.
• E) There is more than one Nash equilibrium for this game.

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