Take care of plagiarism. Two firms face the following payoff matrix shown to the right. Given these profits,Firm 2 wants to match Firm 1's price, but Firm 1 does not want to match Firm 2'sprice.Does either firm have a dominant strategy?Firm 1's dominant strategy does not existdoes not existand Firm 2's dominant strategyDoes this game have a unique, pure-strategy Nash equilibrium?O A. The Nash equilibrium is for Firm 1 to pick the high price and for Firm 2 topick the low price.B. The Nash equilibrium is for Firm 1 to pick the low price and for Firm 2 topick the high price.C. The Nash equilibrium is for both firms to pick the low price.D. The game does not have a pure-strategy Nash equilibrium.E. The Nash equilibrium is for both firms to pick the high price.

let's analyze each firm's possible strategies. Firm 1's payoff is highest when it chooses a high…

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Does either firm have a dominant strategy? Firm 1's dominant strategy does not exist does not exist and Firm 2's do Does this game have a unique, pure-strategy Nash equilibrium?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Take care of plagiarism.

Two firms face the following payoff matrix shown to the right. Given these profits,
Firm 2 wants to match Firm 1's price, but Firm 1 does not want to match Firm 2's
price.
Does either firm have a dominant strategy?
Firm 1's dominant strategy does not exist
does not exist
and Firm 2's dominant strategy
Does this game have a unique, pure-strategy Nash equilibrium?
O A. The Nash equilibrium is for Firm 1 to pick the high price and for Firm 2 to
pick the low price.
B. The Nash equilibrium is for Firm 1 to pick the low price and for Firm 2 to
pick the high price.
C. The Nash equilibrium is for both firms to pick the low price.
D. The game does not have a pure-strategy Nash equilibrium.
E. The Nash equilibrium is for both firms to pick the high price.

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