-Intel and AMD Are a Duopoly That Produce CPU Chips

question 206

Multiple Choice

-Intel and AMD are a duopoly that produce CPU chips.Intel and AMD can conduct R&D or they can not conduct R&D.The table above shows the payoff matrix for the two firms.The numbers are millions of dollars of profit.The Nash equilibrium is for Intel to ________ and for AMD to ________ .

• A) conduct R&D; conduct R&D
• B) conduct R&D; not conduct R&D
• C) not conduct R&D; conduct R&D
• D) not conduct R&D; not conduct R&D
• E) conduct R&D; either conduct R&D or not conduct R&D, the equilibrium could be either choice for AMD

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Definitions:

Dynamic Process

An ongoing, ever-changing procedure characterized by activity and progress.

Continuance Commitment

An individual's psychological attachment to an organization, based on the costs they associate with leaving it.

Afford to Leave

The financial capacity or personal situation that allows an individual to exit a job, relationship, or situation without facing significant hardship.

Employee Tendency

The general patterns or propensities of behavior and attitudes exhibited by employees in the workplace.