-Firms a and B Can Conduct Research and Development (R&D)

question 45

Multiple Choice

-Firms A and B can conduct research and development (R&D) or not conduct it. R&D is costly but can increase the quality of the product and increase sales. The payoff matrix is the economic profits of the two firms and is given above, where the numbers are millions of dollars. The Nash equilibrium occurs when

• A) both A and B conduct R&D.
• B) only A conducts R&D.
• C) only B conducts R&D.
• D) neither A nor B conduct R&D.

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Definitions:

Political/legal Change

Alterations in the political or legal environment that can impact businesses, economies, and societies.

Economic Change

Alterations in the structure or performance of an economy, often driven by factors such as technological advancements, policy changes, or market dynamics.