-Intel and AMD are a duopoly that produce CPU chips.Intel and AMD can conduct R&D or they can not conduct R&D.The table above shows the payoff matrix for the two firms.The numbers are millions of dollars of profit.The Nash equilibrium is for Intel to ________ and for AMD to ________ .
A) conduct R&D; conduct R&D
B) conduct R&D; not conduct R&D
C) not conduct R&D; conduct R&D
D) not conduct R&D; not conduct R&D
E) conduct R&D; either conduct R&D or not conduct R&D, the equilibrium could be either choice for AMD

Question

-Intel and AMD are a duopoly that produce CPU chips.Intel and AMD can conduct R&D or they can not conduct R&D.The table above shows the payoff matrix for the two firms.The numbers are millions of dollars of profit.The Nash equilibrium is for Intel to ________ and for AMD to ________ .
A) conduct R&D; conduct R&D 
B) conduct R&D; not conduct R&D 
C) not conduct R&D; conduct R&D 
D) not conduct R&D; not conduct R&D 
E) conduct R&D; either conduct R&D or not conduct R&D, the equilibrium could be either choice for AMD

Quizplus · Accepted Answer

Intel will choose to conduct R&D because it earns a higher profit of $10 million than if it does not conduct R&D ($5 million). AMD will also choose to conduct R&D because it earns a higher profit of $10 million than if it does not conduct R&D ($5 million).

-Intel and AMD Are a Duopoly That Produce CPU Chips