Table 16-5
Consider the following Duopoly game. $\begin{array}{|c|c|c|c|}\hline&&\text { Firm B }\&&\text { U }&\text { D }\
\hline \text { Firm A }&\text { U }&\text { Firm A gets \$140 } & \text { Firm A get \$220 } \
&& \text { Firm B gets \$80 } & \text { Firm B gets \$160 } \
\hline &\text { D }&\text { Firm A gets \$160 } & \text { Firm A gets \$80 } \
&&\text { Firm B gets \$220 } & \text { Firm B gets \$100 } \
\hline
\end{array}$
-Refer to Table 16-5.When this game reaches a Nash equilibrium, profits for firm A and firm B will be:
A)$140 and $80, respectively
B)$220 and -$160, respectively
C)-$160 and $220, respectively
D)-$80 and -$100, respectively

Question

Quizplus · Accepted Answer

The Nash equilibrium is when both firms produce 10 units, resulting in profits of $140 for firm A and $80 for firm B. At this level of production, neither firm has an incentive to deviate from their strategy as increasing or decreasing production would result in lower profits.

Table 16-5 Consider the Following Duopoly Game -Refer to Table 16-5

Table 16-5
Consider the Following Duopoly Game -Refer to Table 16-5