-The above figure shows the payoff matrix for two firms,A and B,selecting an advertising budget.The firms must choose between a high advertising budget and a low advertising budget.A Nash equilibrium is that
A)firm A selects a high advertising budget and firm B selects a low advertising budget.
B)firm A selects a low advertising budget and firm B selects a high advertising budget.
C)both firms select a high advertising budget.
D)both firms select a low advertising budget.

Question

-The above figure shows the payoff matrix for two firms,A and B,selecting an advertising budget.The firms must choose between a high advertising budget and a low advertising budget.A Nash equilibrium is that
A)firm A selects a high advertising budget and firm B selects a low advertising budget. 
B)firm A selects a low advertising budget and firm B selects a high advertising budget. 
C)both firms select a high advertising budget. 
D)both firms select a low advertising budget.

Quizplus · Accepted Answer

A Nash equilibrium occurs when each player's strategy is optimal, given the other player's strategy. In this scenario, both firms choosing a high advertising budget represents a situation where neither firm can unilaterally change its strategy to improve its payoff, assuming the other firm's strategy remains unchanged.

-The Above Figure Shows the Payoff Matrix for Two Firms,A