Table 17-22
Brian and Matt own the only two bicycle repair shops in town. Each must choose between a low price for repair work and a high price. The annual economic profit from each strategy is indicated in the table. The profits are shown as (Matt, Brian) in each cell.
-Refer to Table 17-22. Which of the following statements is correct if Brian and Matt will play this game only once?
A)The Nash equilibrium is the high price.
B)A Nash equilibrium cannot be established unless Brian and Matt collude.
C)A Nash equilibrium cannot be established without the players repeating the game.
D)The Nash equilibrium price is the low price.

Question

Table 17-22
Brian and Matt own the only two bicycle repair shops in town. Each must choose between a low price for repair work and a high price. The annual economic profit from each strategy is indicated in the table. The profits are shown as (Matt, Brian) in each cell. 
-Refer to Table 17-22. Which of the following statements is correct if Brian and Matt will play this game only once?
A)The Nash equilibrium is the high price. 
B)A Nash equilibrium cannot be established unless Brian and Matt collude. 
C)A Nash equilibrium cannot be established without the players repeating the game. 
D)The Nash equilibrium price is the low price.

Quizplus · Accepted Answer

In a one-time game, the Nash equilibrium occurs when both players choose the strategy that is best for them given the strategy chosen by the other player. In this case, both Brian and Matt choosing the low price is the Nash equilibrium because neither can benefit by unilaterally changing their strategy.

Table 17-22 Brian and Matt Own the Only Two Bicycle Repair Shops