(Scenario: Payoff Matrix for Airbus and Boeing) the Payoff Matrix

question 19

Multiple Choice

(Scenario: Payoff Matrix for Airbus and Boeing) The payoff matrix supplied shows outcomes of various strategies that Airbus and Boeing might follow in response to action on the part of the other company. This payoff matrix describes actions in developing so-called superjumbo jets that can carry 600 or more passengers. In each element, the lower-left value gives the outcome for Boeing based on the action of Airbus and the upper-right value gives the outcome for Airbus based on the action of Boeing. For example, in element A, each company will lose $10 million if they both decide to produce superjumbo jets. Which choices (A, B, C,D) are Nash equilibria?

• A) D and B
• B) A and C
• C) B and D
• D) B and C

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Definitions:

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