-The Table Above Shows the Payoff Matrix Offered to Two

question 27

Multiple Choice

-The table above shows the payoff matrix offered to two suspected criminals, Bonnie and Clyde. The payoffs are the years they will spend in prison. The suspected criminals are not allowed to communicate. Given the information in the payoff matrix, the Nash equilibrium is

• A) Clyde confesses and Bonnie might either confess or not confess, either outcome is consistent with the Nash equilibrium.
• B) both Bonnie and Clyde deny committing the crime.
• C) Clyde confesses only if he thinks Bonnie denies committing the crime.
• D) both Bonnie and Clyde confess to the crime.
• E) Bonnie confesses only if she thinks Clyde denies committing the crime.

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Definitions:

Price

The amount of money or compensation exchanged for the ownership or use of a good or service.

Apples

A type of fruit that comes in various colors and flavors, commonly grown in temperate climates.

Perfect Complements

Goods that are consumed together in fixed proportions, such that the consumer regards them as inseparable in use.

Income Effect

The change in an individual's or economy's purchasing power generated by a change in income, affecting the quantity demanded of a good or service.