-The Only Two Firms in a Market Are Trying to Decide

question 159

Multiple Choice

-The only two firms in a market are trying to decide what price to charge.The payoff matrix for this duopoly game is shown above.The payoffs are thousands of dollars of economic profit.Which of the following statements is correct?

• A) If the firms play this game repeatedly, one would end up charging $20 and the other $10.
• B) If the firms cooperate, both could make $55,000 in economic profit.
• C) The Nash equilibrium in this game is for both firms to set P = $20 because that maximizes their combined profit.
• D) Firm B's strategy is to always set P = $20 because that gives Firm B the highest possible profit.
• E) If Firm B sets P = $20, then Firm A will maximize its profit by setting its P = $20.

Analyze the power of a hypothesis test and interpret power curves.

Understand the social facilitation effect on eating behavior.

Identify the factors influencing obesity and weight control.

Explain the correlation between body weight, genetics, and environmental factors.

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