The Table Given Below Represents the Payoff Matrix of Firms

question 80

Multiple Choice

The table given below represents the payoff matrix of firms A and B,when they choose to produce either high output or low output.In each cell,the figure on the left indicates Firm B's payoffs and the figure on the right indicates Firm A's payoffs.

If X = 10 and Y = 15,then which of the following conclusions can be drawn from the information given in Table 14-3?

• A)The game has a Nash equilibrium and a dominant-strategy equilibrium.
• B)The game has a Nash equilibrium but not a dominant-strategy equilibrium.
• C)The game does not have a Nash equilibrium but has a dominant-strategy equilibrium.
• D)The game has neither a Nash equilibrium nor a dominant-strategy equilibrium.

---

Definitions:

Backward-Bending

Describes a labor supply curve that bends backwards at higher wage rates, indicating that higher wages can lead to a decrease in labor supplied due to income effects.

Engel Curve

A graphical representation showing the relationship between a consumer's income and the quantity of a good consumed, keeping all other factors constant.

Total Effect

The overall impact on a dependent variable when one or more independent variables change.

Price Change

An alteration in the cost of goods and services in the market, which can be due to various factors like inflation, supply and demand changes, or external economic conditions.