Refer to the Accompanying Payoff Matrix

question 27

Multiple Choice

Refer to the accompanying payoff matrix.Which of the following is a Nash equilibrium?

• A) Company A chooses Strategy 1 and Company B chooses Strategy 1.
• B) Company A chooses Strategy 1 and Company B chooses Strategy 2.
• C) Company A chooses Strategy 2 and Company B chooses Strategy 2.
• D) Company A chooses Strategy 2 and Company B chooses Strategy 1.
• E) None of the above.

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Definitions:

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale, leading to increased interconnectedness and interdependence of economies worldwide.

Technological Advancements

The progress in technology which enhances efficiency, productivity, and capabilities in various industries.

Transportation Costs

Expenses incurred in moving goods and services from one location to another, significantly impacting trade and the final price of products.

North American Free Trade Agreement

A trilateral trade bloc in North America created by Canada, Mexico, and the United States to reduce trading costs, increase business investment, and help North America be more competitive in the global marketplace.