Suppose Two Companies, Macrosoft and Apricot, Are Considering Whether to Develop

question 107

Multiple Choice

Suppose two companies, Macrosoft and Apricot, are considering whether to develop a new product, a touch-screen t-shirt. The payoffs to each of developing a touch-screen t-shirt depend upon the actions of the other, as shown in the payoff matrix below (the payoffs are given in millions of dollars) .  
Suppose Apricot makes its decision first, and then Macrosoft makes its decision after seeing Apricot's choice. What will be the equilibrium outcome of this game?

• A)Apricot will develop a touch-screen t-shirt, and Macrosoft will not.
• B)Macrosoft will develop a touch-screen t-shirt, and Apricot will not.
• C)Both Apricot and Macrosoft will develop a touch-screen t-shirt.
• D)Neither Apricot nor Macrosoft will develop a touch-screen t-shirt.

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Definitions:

Hypoxia

A state where the body or a specific area of the body experiences insufficient oxygen supply at the tissue level.

Restlessness

A state of unease or inability to remain still or quiet, often reflecting emotional or physical discomfort.

Blood Pressure

The force exerted by circulating blood upon the walls of blood vessels, often measured to assess heart health.

Emphysema

A chronic respiratory disease where the air sacs in the lungs become damaged, leading to difficulty in breathing.