The only two firms in a market are trying to decide what price to charge. The payoff matrix for this duopoly game is shown below. The payoffs are thousands of dollars of economic profit. In the Nash equilibrium,             A). Firm A and Firm B are both making $80,000 in economic profit.       B). Firm A and Firm B are both making $75,000 in economic profit.       C). Firm A is making $80,000 and Firm B is making $75,000 in economic profit.       D). Firm A and Firm B are both making $60,000 in economic profit.

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter2: Choice In A World Of Scarcity
Section: Chapter Questions
Problem 18RQ: What are four responses to the claim that people should not behave in the way described in this...
icon
Related questions
Question

The only two firms in a market are trying to decide what price to charge. The payoff matrix for this duopoly game is shown below. The payoffs are thousands of dollars of economic profit. In the Nash equilibrium,  

 

 

 

 

 

A). Firm A and Firm B are both making $80,000 in economic profit.

 

   

B). Firm A and Firm B are both making $75,000 in economic profit.

 

   

C). Firm A is making $80,000 and Firm B is making $75,000 in economic profit.

 

   

D). Firm A and Firm B are both making $60,000 in economic profit.

 

1.25
Firm A's Strategies
Price = S5
Price = $10
S60
$54
$60
$80
Firm B's
um,
Price = $5
Strategies
S80
$75
$54
S75
Price = $10
Transcribed Image Text:1.25 Firm A's Strategies Price = S5 Price = $10 S60 $54 $60 $80 Firm B's um, Price = $5 Strategies S80 $75 $54 S75 Price = $10
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Nash Equilibrium
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Brief Principles of Macroeconomics (MindTap Cours…
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:
9781305971509
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning