Table 16-19 Brian and Matt Own the Only Two Bicycle Repair Shops

question 230

Multiple Choice

Table 16-19
Brian and Matt own the only two bicycle repair shops in town. Each must choose between a low price for repair work and a high price. The annual economic profit from each strategy is indicated in the table. The profits are shown as (Matt, Brian) in each cell.

-Refer to Table 16-19.Which of the following statements is correct if Brian and Matt will play this game only once?

• A)The Nash equilibrium is for players to choose the low price.
• B)A Nash equilibrium cannot be established unless Brian and Matt collude.
• C)A Nash equilibrium cannot be established without the players repeating the game.
• D)The Nash equilibrium price is the low price.

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Definitions:

Optimist

An individual who tends to maintain a hopeful and positive outlook on life and its challenges.

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A perspective or individual focused on accepting situations and facts as they truly are without relying on speculative or idealistic views.

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Scientists who study the complex interactions among the nervous system, mental states, and the immune system.