Table 17-21 The Chicken Game Is Named for a Contest in Which

question 194

Multiple Choice

Table 17-21
The Chicken Game is named for a contest in which drivers test their courage by driving straight at each other. John and Paul have a common interest to avoid crashing into each other, but they also have a personal, competing interest to not turn first to demonstrate their courage to those observing the contest. The payoff table for this situation is provided below. The payoffs are shown as (John, Paul) .
-Refer to Table 17-21. How many Nash equilibria are there in this Chicken game?

• A)0
• B)1
• C)2

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Definitions:

Shortage

A market condition where the demand for a product or service exceeds its supply, often leading to higher prices or queuing.

Equilibrium Price

The price at which the quantity of a good demanded equals the quantity of the good supplied.

Surplus

A situation where there is excess of supply over demand in the market, leading to downward pressure on prices.

Decrease in Demand

A situation where consumers are willing and able to purchase less of a good or service at any given price, often reflected in a leftward shift of the demand curve.