-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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A government intervention mechanism to maintain the price of a commodity at a certain level by buying excess supply or offering subsidies.

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