Use the following to answer question:
Figure: Payoff Matrix for Jake and Zoe
-(Figure: Payoff Matrix for Jake and Zoe)Use Figure: Payoff Matrix for Jake and Zoe.Jake and Zoe are the only producers of slushies in their tourist town.Every week,each decides whether to price high or price low for the following week.The figure shows the profit per week earned by their two firms.According to the Nash equilibrium,Jake prices _____ and Zoe prices _____.
A)high;high
B)high;low
C)low;high
D)low;low

Question

Use the following to answer question:
Figure: Payoff Matrix for Jake and Zoe 
-(Figure: Payoff Matrix for Jake and Zoe)Use Figure: Payoff Matrix for Jake and Zoe.Jake and Zoe are the only producers of slushies in their tourist town.Every week,each decides whether to price high or price low for the following week.The figure shows the profit per week earned by their two firms.According to the Nash equilibrium,Jake prices _____ and Zoe prices _____.
A)high;high 
B)high;low 
C)low;high 
D)low;low

Quizplus · Accepted Answer

The Nash equilibrium occurs when both players choose their best response given the other player's choice. In this game, if Zoe prices high, Jake's best response is to price low to earn a profit of 8. Similarly, if Jake prices high, Zoe's best response is to price low to earn a profit of 4. Therefore, the only stable outcome is when both players price low, resulting in a profit of 3 each, as neither player has an incentive to deviate from this strategy. Thus, the answer is D: low;low.

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