Use the Following to Answer Question 2- 4

question 25

Multiple Choice

Use the following to answer question 2- 4.
Consider the following information for a simultaneous move game: If you charge a low price (LP) and your rival charges a LP,you each will earn $5 million in profits.If both charge a high price (HP) ,each will each earn $10 million in profits.However,if one charge a LP and the other does not,the firm that charges a LP will earn $15 million and the other firm will earn $1 million.
-If both firms plan to be in business for one-year,the Nash Equilibrium will be

• A)For each firm charge LP
• B)For neither firm to charge LP
• C)For one firm to charge LP and the other HP
• D)None of the above.

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Definitions:

Stake

An interest or share in an undertaking, which could be financial, emotional, or professional.

Medicare

A federal health insurance program in the United States for people aged 65 and over, as well as for some younger people with disabilities.

Federal Health Insurance

Government-provided health insurance schemes in countries, often covering a large part of the population or specific groups, such as seniors or low-income individuals.

Entitlement

A right to benefits specified especially by law or contract.