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Figure: Payoff Matrix II for Blue Spring and Purple Rain
-(Figure: Payoff Matrix II for Blue Spring and Purple Rain)Use Figure: Payoff Matrix II for Blue Spring and Purple Rain.The figure describes two producers of bottled water.The Nash equilibrium in the figure is reached when Blue Spring charges a _____ price and Purple Rain charges a _____ price.
A)high;high
B)low;low
C)high;low
D)low;high

Question

Use the following to answer question:
Figure: Payoff Matrix II for Blue Spring and Purple Rain 
-(Figure: Payoff Matrix II for Blue Spring and Purple Rain)Use Figure: Payoff Matrix II for Blue Spring and Purple Rain.The figure describes two producers of bottled water.The Nash equilibrium in the figure is reached when Blue Spring charges a _____ price and Purple Rain charges a _____ price.
A)high;high 
B)low;low 
C)high;low 
D)low;high

Quizplus · Accepted Answer

In a Nash equilibrium, each player's strategy is optimal given the other player's strategy. In this payoff matrix, both firms charging a low price is the Nash equilibrium because neither firm can increase its payoff by unilaterally changing its strategy.

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