Table 16-19
Brian and Matt own the only two bicycle repair shops in town. Each must choose between a low price for repair work and a high price. The annual economic profit from each strategy is indicated in the table. The profits are shown as (Matt, Brian) in each cell.

-Refer to Table 16-19.Which of the following statements is correct if Brian and Matt will play this game only once?

Question

Table 16-19
Brian and Matt own the only two bicycle repair shops in town. Each must choose between a low price for repair work and a high price. The annual economic profit from each strategy is indicated in the table. The profits are shown as (Matt, Brian) in each cell.
 
-Refer to Table 16-19.Which of the following statements is correct if Brian and Matt will play this game only once?

Quizplus · Accepted Answer

In a one-time game, the Nash equilibrium is the outcome where neither player has an incentive to change their strategy, given that the other player's strategy is held constant. In this game, the only Nash equilibrium is for both players to choose the low price, as neither player has an incentive to deviate from this strategy regardless of the other player's chosen strategy. Therefore, the correct answer is D, the Nash equilibrium price is the low price.

Table 16-19 Brian and Matt Own the Only Two Bicycle Repair Shops