-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. Both firms setting a high price is NOT a Nash equilibrium because
A)setting a high price is the dominant strategy for each firm.
B)neither firm can improve its payoff by setting a low price given that the other firm is setting a high price.
C)there is no dominant strategy for either firm.
D)both firms can improve their payoff by setting a low price given that the other firm is setting a high price.

Question

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. Both firms setting a high price is NOT a Nash equilibrium because
A)setting a high price is the dominant strategy for each firm. 
B)neither firm can improve its payoff by setting a low price given that the other firm is setting a high price. 
C)there is no dominant strategy for either firm. 
D)both firms can improve their payoff by setting a low price given that the other firm is setting a high price.

Quizplus · Accepted Answer

Both firms can improve their payoff by setting a low price if the other firm is setting a high price, indicating that setting a high price is not a stable strategy.

-The Above Figure Shows a Payoff Matrix for Two Firms