-The above figure shows a payoff matrix for two firms,A and B,that must choose between selling basic computers or advanced computers.Which of the following is a Nash equilibrium?
A) Both firms make advanced computers.
B) Both firms make basic computers.
C) Firm A makes basic computers and firm B makes advanced computers.
D) There are no Nash equilibria.

Question

-The above figure shows a payoff matrix for two firms,A and B,that must choose between selling basic computers or advanced computers.Which of the following is a Nash equilibrium?
A) Both firms make advanced computers. 
B) Both firms make basic computers. 
C) Firm A makes basic computers and firm B makes advanced computers. 
D) There are no Nash equilibria.

Quizplus · Accepted Answer

In a Nash equilibrium, no player can benefit by changing their strategy while the other players keep theirs unchanged. In choice C, if Firm A makes basic computers and Firm B makes advanced computers, neither firm can improve their payoff by unilaterally changing their strategy, assuming the other firm's strategy remains the same. This satisfies the condition for a Nash equilibrium.

-The Above Figure Shows a Payoff Matrix for Two Firms,A