-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,what happens if the government imposes a $20 per firm tax on firms that service this route?
A) Neither firm has a dominant strategy.
B) Not entering is a dominant strategy for both firms.
C) Neither firm entering is a Nash equilibrium.
D) Only firm A will enter.

Question

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,what happens if the government imposes a $20 per firm tax on firms that service this route?
A) Neither firm has a dominant strategy. 
B) Not entering is a dominant strategy for both firms. 
C) Neither firm entering is a Nash equilibrium. 
D) Only firm A will enter.

Quizplus · Accepted Answer

The $20 tax affects the payoffs, potentially altering the strategies. With the tax, neither firm may have a dominant strategy, as the costs of entering increase, making the decision more complex.

-The Above Figure Shows the Payoff to Two Airlines,A and B,of