-The Only Two Firms in a Market Are Trying to Decide

question 116

Multiple Choice

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.In the Nash equilibrium,Firm A will set a price of ________ and Firm B will set a price of ________.

• A) $10; $20
• B) $20; $10
• C) $10; $10
• D) $20; $20
• E) $20; something, but more information is needed to determine Firm B's price

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Definitions:

Balance Sheet

A financial statement that presents a company's assets, liabilities, and shareholders' equity at a specific point in time, showing its financial position.

Cost of Goods Sold

The expenses directly linked to the creation of a company's sold products, comprising both materials and labor.

Factory Rent

Refers to the cost incurred for renting a facility or space for manufacturing operations, a common type of fixed expense for manufacturers.

Direct Labor

The price of paying staff who are directly participating in the manufacturing of goods or provision of services.