(Table: Players a and B IV) Payoffs Represent Profits in Millions

question 74

Multiple Choice

(Table: Players A and B IV) Payoffs represent profits in millions of dollars. Which of the following statements is (are) TRUE?
I. In a simultaneous game that is played only once, the Nash equilibrium is (0 , 0) .
II. In a sequential game in which Player A moves first, the Nash equilibrium is (6 , 0) .
III. In the sequential game, Player A has a first-mover advantage.

• A) I and III
• B) II
• C) II and III
• D) I, II, and III

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Definitions:

Optimal Factor Mix

The most efficient combination of resources and inputs a firm uses to produce goods or services at the lowest cost.

Resource Markets

Markets where productive inputs, such as labor, natural resources, and capital, are bought and sold.

Productivities

The levels of output or efficiency achieved from a set amount of inputs in production or work processes.

Profit-Maximizing

The process where a firm adjusts its production to achieve the highest possible profit given its constraints.