Refer to Table 15

question 3

Multiple Choice

Refer to Table 15.2.5.Two software firms have developed an identical new software application.They are debating whether to give the new application away free and then sell add-ons or sell the application at $30 a copy.The payoff matrix is above and the payoffs are profits in millions of dollars.What is the Nash equilibrium of the game?

• A)Both Firm 1 and 2 will sell the software application at $30 a copy.
• B)Both Firm 1 and 2 will give the software application away free.
• C)Firm 1 will give the application away free and Firm 2 will sell it at $30.
• D)There is no Nash equilibrium to this game.
• E)Firm 1 will sell the application for $30 and Firm 2 will give it away.

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Definitions:

Value Meal

A bundled meal offered at a fast-food restaurant at a discounted price, typically including a main item, a side, and a drink.

Tacos

A traditional Mexican dish made of a corn or wheat tortilla folded or rolled around a filling such as beef, chicken, or vegetables.

Marginal

Referring to the change in an outcome resulting from a one-unit increase in an input or variable.

Alternatives

Different options or choices available in a given situation or for a particular problem.