If Nike and Adidas Are Faced with the Game in the Figure

question 2

Multiple Choice

If Nike and adidas are faced with the game in the figure shown, we can predict:

• A)an outcome that is good for society but less than ideal for these companies.
• B)an outcome that is less than ideal for society, but optimal for these companies.
• C)that both companies will choose their dominant strategies, and society will lose.
• D)None of these is likely to happen.

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Definitions:

Long Run

A period in economic analysis where all factors of production are variable, allowing for complete industry adjustment.

Industry Supply

The total output of goods or services that firms in a specific industry are willing and able to sell at various prices, over a certain period of time.

Purely Competitive Industry

A market structure where many firms offer products or services that are similar, allowing for free entry and exit, and ensuring no single firm can influence market prices.