-Intel and AMD are a duopoly that produces CPU chips.Intel and AMD can conduct R&D or they cannot 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 produces CPU chips.Intel and AMD can conduct R&D or they cannot 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

In a Nash equilibrium, each player's strategy is optimal given the other player's strategy. Without the specific payoff matrix, we typically assume that R&D competition in a duopoly like Intel and AMD would lead to both firms conducting R&D to maintain competitive advantage and innovation pace, making choice A the most logical given typical market dynamics.

-Intel and AMD Are a Duopoly That Produces CPU Chips