The Accompanying Table Shows Two Firms in a Single-Stage Game

question 55

Multiple Choice

The accompanying table shows two firms in a single-stage game.Each firm makes its decision without knowledge of the other firm's decision.The payoffs for each firm represent economic profits,and each firm strictly prefers more economic profit than less.In the Nash equilibrium of this game,Pepsi earns a profit of ________ and Coca-Cola earns a profit of ________.

• A) $67.5 million; $67.5 million
• B) $30 million; $30 million
• C) $37.5 million; $75 million
• D) $75 million; $37.5 million
• E) $50 million; $50 million

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Definitions:

Marginal Cost Curve

A graphical representation that shows how the cost of producing one more unit of a good changes as the quantity produced increases.

Short-run Supply Curve

A graphical depiction that showcases how much of a product suppliers are willing and able to sell at different prices in the short run, with at least one input fixed.

Perfectly Competitive Industry

An industry characterized by many small firms producing identical products, with free entry and exit, and perfect information, leading to prices being determined by the market.

Alfalfa

A plant widely used for livestock feed due to its high nutritional content and also used as a cover crop for soil improvement.