(See Problem 1

question 15

Multiple Choice

(See Problem 1.) Alice and Betsy are playing a game in which each can play either of two strategies, leave or stay. If both play the strategy leave, then each gets a payoff of $300. If both play the strategy stay, then each gets a payoff of $600. If one plays stay and the other plays leave, then the one who plays stay gets a payoff of $C and the one who plays leave gets a payoff of $D. When is the outcome where both play leave a Nash equilibrium?

• A) When $300 > C and D > $600 but not when $600 >D.
• B) Never, since $600 > $300.
• C) Whenever D < $600.
• D) When D > C and C > $300.
• E) Whenever $300 > C.

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Definitions:

Express Warranties

Explicit promises or assurances made by a seller regarding the condition, functionality, or quality of a product.

Common Law Language

The language used in common law jurisdictions, based on judicial decisions and customs, as opposed to statutes.

Implied Warranty

An unwritten guarantee that a product will meet a minimum level of quality and functionality.

Merchantability

A warranty that goods sold will be of average quality, fit for the general purpose for which they are sold.