Suppose two companies, Macrosoft and Apricot, are considering whether to develop a new product, a touch-screen t-shirt. The payoffs to each of developing a touch-screen t-shirt depend upon the actions of the other, as shown in the payoff matrix below (the payoffs are given in millions of dollars).
Which of the following statements is correct?
A)Apricot's dominant strategy is to develop a touch-screen t-shirt.
B)Apricot's dominant strategy is to develop a touch-screen t-shirt if Macrosoft does not.
C)Apricot's dominant strategy is to not develop a touch screen t-shift.
D)Apricot does not have a dominant strategy.

Question

Suppose two companies, Macrosoft and Apricot, are considering whether to develop a new product, a touch-screen t-shirt. The payoffs to each of developing a touch-screen t-shirt depend upon the actions of the other, as shown in the payoff matrix below (the payoffs are given in millions of dollars).   
 Which of the following statements is correct?
A)Apricot's dominant strategy is to develop a touch-screen t-shirt. 
B)Apricot's dominant strategy is to develop a touch-screen t-shirt if Macrosoft does not. 
C)Apricot's dominant strategy is to not develop a touch screen t-shift. 
D)Apricot does not have a dominant strategy.

Quizplus · Accepted Answer

If Macrosoft develops a touch-screen t-shirt, then Apricot's best response is to not develop one, and if Macrosoft does not develop a touch-screen t-shirt, then Apricot's best response is to develop one. Thus, since Apricot's best response depends on what Macrosoft does, Apricot does not have a dominant strategy.

Suppose Two Companies, Macrosoft and Apricot, Are Considering Whether to Develop