-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.Now the payoff of the firm who produces a basic computer falls to 10 if the other firm chooses to produce an advanced computer.Then
A)both firms will have dominant strategies.
B)Nash equilibria will not change.
C)joint profits will be maximized at the Nash equilibrium.
D)Firm A and firm B will choose different actions.

Question

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.Now the payoff of the firm who produces a basic computer falls to 10 if the other firm chooses to produce an advanced computer.Then
A)both firms will have dominant strategies. 
B)Nash equilibria will not change. 
C)joint profits will be maximized at the Nash equilibrium. 
D)Firm A and firm B will choose different actions.

Quizplus · Accepted Answer

The payoff of firm A for producing a basic computer falls to 10 if firm B produces an advanced computer. This means that firm A's dominant strategy is to produce an advanced computer, regardless of what firm B does. Firm B's dominant strategy is also to produce an advanced computer, regardless of what firm A does. Therefore, both firms will have dominant strategies.

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