-The Table Above Shows the Payoff Matrix Offered to Two

question 134

Multiple Choice

-The table above shows the payoff matrix offered to two suspected criminals,Bonnie and Clyde.The payoffs are the years they will spend in prison.The suspected criminals are not allowed to communicate.Given the information in the payoff matrix,the Nash equilibrium is

• A) Bonnie confesses only if she thinks Clyde denies committing the crime.
• B) Clyde confesses only if he thinks Bonnie denies committing the crime.
• C) both Bonnie and Clyde confess to the crime.
• D) both Bonnie and Clyde deny committing the crime.
• E) Clyde confesses and Bonnie might either confess or not confess, either outcome is consistent with the Nash equilibrium.

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Definitions:

Consumer Surplus

The difference between the maximum price consumers are willing to pay for a good or service and the actual price they pay, representing the benefit obtained by consumers in the transaction.

Market Price

The current price at which an asset or service can be bought or sold; determined by supply and demand.

Sugar Quotas

Government-imposed limits on the quantity of sugar that can be imported or produced domestically, often used to protect domestic production and control prices.

Quota Limits

Refers to government-imposed restrictions on the quantity or monetary value of goods that can be imported or exported over a specific period.