-Intel and AMD Are a Duopoly That Produces CPU Chips

question 190

Multiple Choice

-Intel and AMD are a duopoly that produces CPU chips.Intel and AMD can conduct R&D or they cannot conduct R&D.The table above shows the payoff matrix for the two firms.AMD is playing a tit-for-tat strategy and Intel did not conduct R&D last period.Then,of the following answers,Intel's total profit for the next two periods is the highest if Intel ________ R&D this period and ________ R&D next period.

• A) conducts; conducts
• B) does not conduct; conducts
• C) conducts; does not conduct
• D) does not conduct; does not conduct
• E) conducts; either conducts or does not conduct because the profit is the same in either case

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