-Refer to Figure 2.1, which represents the normal form of a noncooperative, one-time, static game. A Nash equilibrium occurs at the strategy profile:
A) {Raise price, Raise price}.
B) {Raise price, Don't raise price}.
C) {Don't raise price, Raise price}.
D) {Don't raise price, Don't raise price}.

Question

-Refer to Figure 2.1, which represents the normal form of a noncooperative, one-time, static game. A Nash equilibrium occurs at the strategy profile:
A) {Raise price, Raise price}. 
B) {Raise price, Don't raise price}. 
C) {Don't raise price, Raise price}. 
D) {Don't raise price, Don't raise price}.

Quizplus · Accepted Answer

Nash equilibrium occurs when neither player can improve their payoff by changing their strategy, given the strategy of the other player. In this case, the only Nash equilibrium is {Raise price, Raise price}, because if either player deviates from this strategy, they will earn a lower payoff.