The Accompanying Table Shows Two Firms in a Single-Stage Duopoly

question 2

Multiple Choice

The accompanying table shows two firms in a single-stage duopoly game. Each firm makes its decision without knowledge of the other firm's decision. The payoffs for each firm represent economic profits, and each firm strictly prefers more economic profit than less. Assume firms are not able to collude. The Nash equilibrium total quantity of potatoes on the market is: $\begin{array} { l }&\text { Country Potato Farm }\\\text { City Potato Farm }&\begin{array} { l }\quad\quad\text { Produce } 5,000 \text {Potatoes }\quad\quad\text { Produce } 5,000 \text { Potatoes}\\\begin{array} { l } \text { Produce} \\ \text { 5,000} \\ \text {Potatoes } \\\\ \text { Produce} \\ \text { 7,000} \\ \text {Potatoes } \\\end{array}\begin{array}{|l|l|}\hline \$25,000\quad\quad\quad&\$35,000\quad\quad\quad \\\\\$25,000&\$10,000\\\hline \$10,000&\$12,000\\\\\$35,000&\$12,000 \\\\\hline\end{array}\end{array}\end{array}$

• A) 12,000
• B) 4,000
• C) 10,000
• D) 14,000
• E) 24,000

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Definitions:

Sequence

A specific order in which related events, movements, or things follow each other.

Prototype Matching Hypothesis

A theory suggesting that patterns of recognition are based on how closely stimuli match cognitive prototypes, or idealized examples, in memory.

Agentic

Pertaining to an agent or someone who acts; relating to actions that result from one's own choices and decisions, rather than external forces.

Least Preferred Co-Worker

A concept used to measure a leader's task or relationship orientation by assessing their feelings about their least preferred coworker.