Answer the Question Based on the Payoff Matrix for a Duopoly

question 103

Multiple Choice

Answer the question based on the payoff matrix for a duopoly in which the numbers indicate the profit from either opening a coffee shop in a small town or not opening the coffee shop. If both firms choose their strategies simultaneously, then

• A)firm A's dominant strategy is to open a coffee shop.
• B)there is no Nash equilibrium for this game.
• C)firm B's dominant strategy is to not open a coffee shop.
• D)both firms have a dominant strategy to not open a coffee shop.

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Definitions:

Trade Restrictions

Measures imposed by governments to control the import and export of goods and services with the intention of protecting domestic industries, which can include tariffs, quotas, and other barriers.

Efficiency Argument

The principle that resources should be allocated in a way that maximizes the productivity or welfare of a community or economy.

Jobs Argument

A perspective or argument centered on the impacts of economic policies or business decisions on employment levels.

Infant-Industry

An economic rationale for trade protectionism arguing that new industries need to be shielded from international competition to allow them to grow and become competitive.