The payoff matrix below shows the payoffs to Firms A and B from producing different levels of output.The numbers in parentheses are (payoff to A,payoff to B). TABLE 11-3
-Refer to Table 11-3.From the payoff matrix we can infer that

Question

The payoff matrix below shows the payoffs to Firms A and B from producing different levels of output.The numbers in parentheses are (payoff to A,payoff to B).  TABLE 11-3
-Refer to Table 11-3.From the payoff matrix we can infer that

Quizplus · Accepted Answer

In the Nash equilibrium, each firm is producing the output level that is optimal given the output level of the other firm. In this payoff matrix, the only Nash equilibrium is (Produce 2000 units, Produce 2000 units), as neither firm has an incentive to deviate from this strategy. At this output level, Firm A will receive a payoff of 3000 and Firm B will receive a payoff of 2000, which are both the highest payoffs they can achieve given the other firm's output level. Therefore, it is optimal for Firm A to produce 2000 units of output regardless of what Firm B is doing.

The Payoff Matrix Below Shows the Payoffs to Firms a and B