Refer to the following figure:
Two firms, A and B, produce similar, but not identical, products. BRA and BRB are, respectively, the reaction functions for firms A and B, which compete primarily by price.
-In Nash equilibrium,
A) each firm has an incentive to increase price unilaterally.
B) the two firms are maximizing joint profit.
C) firm A charges $12 and firm B charges $16.
D) each firm is maximizing its profit, given what the other is doing.
E) both c and d
Correct Answer:
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Q11: Refer to the following figure showing the
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