The Payoff Matrix Below Shows the Payoffs to Firms a and B

question 54

Multiple Choice

The payoff matrix below shows the payoffs to Firms A and B from producing different levels of output. The numbers in parentheses are (payoff to A, payoff to B) . $$\begin{array} { l l | c | c } & & { \text { Firm B } } \\& & \text { Produce } & \text { Produce } \\& & 1000 \text { Units } & 2000 \text { Units } \\\hline & \text { Produce } & & \\& \text { 1000 Units } & ( 100,100 ) & ( 10,150 ) \\\text { Firm A } & & & \\& \text { Produce } & (150,10) & ( 30,30 ) \end{array}$$ TABLE 11- 3
-Refer to Table 11- 3. The Nash equilibrium in this game is

• A) (Firm A: produce 1000 units, Firm B: produce 1000 units).
• B) (Firm A: produce 2000 units, Firm B: produce 2000 units).
• C) (Firm A: produce 2000 units, Firm B: produce 1000 units).
• D) (Firm A: produce 1000 units, Firm B: produce 2000 units).
• E) non- existent.

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Definitions:

Profit Maximizing

A strategy or process undertaken by a firm to achieve the highest possible profit from its operations.

Price

The amount of money required to purchase a product or service.

Price Elasticity Of Demand

Percentage change in quantity demanded of a good resulting from a 1-percent increase in its price.

Marginal Revenue

The extra revenue received from the sale of an additional unit of a product or service.