Suppose That Currently There Are No Airlines Serving the City

question 28

Multiple Choice

Suppose that currently there are no airlines serving the city of South Podunk. Both Accommodating Airlines and Friendly Flyers are looking to enter that market. (They are the only two.) The figure shows in extensive form the possible outcomes of the two firms' decisions. The payoffs represent, in thousands per month, the profit (or loss) the firm will realize from its decision. Assuming the two firms have perfect information about this game, what can we conclude about the existence of a Nash equilibrium?

• A)The solution to the game is a Nash equilibrium.
• B)There are multiple Nash equilibria for this game.
• C)There is no Nash equilibrium for this game.
• D)There is a Nash equilibrium for this game, but it does not coincide with the solution to the game.

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Definitions:

Weight Pounds

A measurement of weight using the pound as the unit, commonly used in the English measurement system.

Rolling Mill

A machine or factory setup for rolling metal into sheets, rods, or various shapes through compressive forces applied by rotating rolls.

Equal Leg Angles

Structural shapes whose sides form a 90-degree angle and have legs of equal length, commonly used in construction.

Unequal Leg Angles

Structural steel shapes where the two sides forming the angle are of different lengths.