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

question 97

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) . If Macrosoft and Apricot make their decision at the same time, then which of the following statements is correct?

• A)The only Nash equilibrium is that both develop a touch-screen t-shirt.
• B)The only Nash equilibrium is that neither develops a touch-screen t-shirt.
• C)The game does not have a Nash equilibrium.
• D)The game has more than one Nash equilibrium.

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Definitions:

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