Table 16-15

-Refer to Table 16-15.This table shows a game played between two firms,A and B.Each firm must decide how much output to produce.The profits for each firm are shown in the table as (Profit for A,Profit for B).The Nash equilibrium in this game is
A)Q=5 for A and Q=5 for B.
B)Q=5 for A and Q=6 for B.
C)Q=6 for A and Q=5 for B.
D)Q=6 for A and Q=6 for B.

Question

Table 16-15
 
-Refer to Table 16-15.This table shows a game played between two firms,A and B.Each firm must decide how much output to produce.The profits for each firm are shown in the table as (Profit for A,Profit for B).The Nash equilibrium in this game is
A)Q=5 for A and Q=5 for B. 
B)Q=5 for A and Q=6 for B. 
C)Q=6 for A and Q=5 for B. 
D)Q=6 for A and Q=6 for B.

Quizplus · Accepted Answer

The Nash Equilibrium is a situation in which both firms are producing at their best without any incentive to change their decision. From the table, we can see that the highest profit for Firm A occurs when it produces 6 units of output (earning $360) and Firm B produces 6 units of output (earning $240). At this point, neither firm has any incentive to change their output level because any deviation would lead to a decrease in profit. Thus, the Nash Equilibrium is (Q=6 for A and Q=6 for B). Therefore, the correct answer is D.

Table 16-15 -Refer to Table 16-15.This Table Shows a Game Played Between