Table 16-14

-Refer to Table 16-14.This table shows a game played between two firms,A and B.The firms must choose how much output to produce.The profit for each firm is shown in the table as (Profit for A,Profit for B).Which of the following outcomes represent the Nash equilibrium in this game?
A)Q=2 for A and Q=3 for B.
B)Q=3 for A and Q=2 for B.
C)There is no Nash equilibrium in this game since neither player has a dominant strategy.
D)Both a and b are correct.

Question

Table 16-14
 
-Refer to Table 16-14.This table shows a game played between two firms,A and B.The firms must choose how much output to produce.The profit for each firm is shown in the table as (Profit for A,Profit for B).Which of the following outcomes represent the Nash equilibrium in this game?
A)Q=2 for A and Q=3 for B. 
B)Q=3 for A and Q=2 for B. 
C)There is no Nash equilibrium in this game since neither player has a dominant strategy. 
D)Both a and b are correct.

Quizplus · Accepted Answer

A Nash equilibrium occurs when no player can improve their payoff by changing their strategy while the other player's strategy remains the same. In this game, both firms have a dominant strategy of producing 2 units of output, which leads to a Nash equilibrium of (2,2). However, the question asks for "outcomes" rather than strategies, and there can be multiple outcomes that lead to the same equilibrium. In this case, both (2,3) and (3,2) are also Nash equilibria because neither player can improve their payoff by changing their strategy while the other player's strategy remains the same. Therefore, the correct answer is D.

Table 16-14 -Refer to Table 16-14.This Table Shows a Game Played Between