Two companies, Acme and Pinnacle, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies. Acme's Decision Good quality Poor quality Pinnacle's profit = $10,000 Pinnacle's profit = $15,000 Good quality Pinnacle's Acme's profit = $10,000 Acme's profit = $6,000 Decision Pinnacle's profit = $6,000 Pinnacle's profit = $12,000 Poor quality Acme's profit = $15,000 Acme's profit = $12,000 At the Nash equilibrium, how much profit will Pinnacle earn? $12,000 because each firm will decide to produce Poor quality products. $10,000 because each firm will decide to produce Good quality products. $6,000 because Acme will decide to produce Good quality products, but Pinnacle will decide to produce Poor quality products. $15,000 because Pinnacle will decide to produce Good quality products, but Acme will decide to produce Poor quality products.

Two companies, Acme and Pinnacle, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies. Acme's Decision Good quality Poor quality Pinnacle's profit = $10,000 Pinnacle's profit = $15,000 Good quality Pinnacle's Acme's profit = $10,000 Acme's profit = $6,000 Decision Pinnacle's profit = $6,000 Pinnacle's profit = $12,000 Poor quality Acme's profit = $15,000 Acme's profit = $12,000 At the Nash equilibrium, how much profit will Pinnacle earn? $12,000 because each firm will decide to produce Poor quality products. $10,000 because each firm will decide to produce Good quality products. $6,000 because Acme will decide to produce Good quality products, but Pinnacle will decide to produce Poor quality products. $15,000 because Pinnacle will decide to produce Good quality products, but Acme will decide to produce Poor quality products.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter18: Asymmetric Information

Section: Chapter Questions

Problem 18.7P

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