Table 17-25
There are just two producers of a certain product. Each is considering offering promotional discounts.
-Refer to Table 17-25. At the Nash equilibrium, how much profit will Firm A earn?
A)$120,000
B)$90,000
C)$80,000
D)$70,000

Question

Table 17-25
There are just two producers of a certain product. Each is considering offering promotional discounts. 
-Refer to Table 17-25. At the Nash equilibrium, how much profit will Firm A earn?
A)$120,000 
B)$90,000 
C)$80,000 
D)$70,000

Quizplus · Accepted Answer

At the Nash equilibrium, both firms will choose to offer a 10% discount. Firm A's profit with a 10% discount is $80,000, which is the highest possible profit it can achieve at the equilibrium. Therefore, the best choice for Firm A is to offer a 10% discount.

Table 17-25 There Are Just Two Producers of a Certain Product. Each