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:

P-Value

A statistical measure that helps researchers determine the significance of their experiment’s results, often indicating the probability of obtaining the observed results if the null hypothesis were true.

Wilcoxon Signed Rank Test

A nonparametric test used to compare two paired groups to determine if their mean ranks differ.

Z-Statistic

A statistical measure that indicates how many standard deviations an element is from the mean of a distribution.

Rejection Region

The range of values for which the null hypothesis is rejected in hypothesis testing, indicating statistical significance.