Refer to the following payoff matrix:
$\begin{array}{r}
\text { Player } 2\
\text { Player } 1
\begin{array}{|l|l|l|}
\hline& \text { Low } Q & \text { High } Q \
\hline & & \
\text { Low } Q & \$ 50, \$ 5 & \$ 15, \$ 30 \
\hline & & \
\text { High } Q & \$ 40, \$ 2 & \$ 2, \$ 1\
\hline
\end{array}
\end{array}$ If the payoff matrix is a simultaneous-move production game,the Nash equilibrium is for:
A) both players to produce low output.
B) both players to produce high output.
C) player 1 to produce low output and player 2 to produce high output.
D) player 1 to produce high output and player 2 to produce low output.

Question

Refer to the following payoff matrix:
$\begin{array}{r}
\text { Player } 2\
\text { Player } 1
\begin{array}{|l|l|l|} 
\hline& \text { Low } Q & \text { High } Q \
\hline & & \
\text { Low } Q & \$ 50, \$ 5 & \$ 15, \$ 30 \
\hline & & \
\text { High } Q & \$ 40, \$ 2 & \$ 2, \$ 1\
\hline
\end{array}
\end{array}$ If the payoff matrix is a simultaneous-move production game,the Nash equilibrium is for:
A) both players to produce low output.
B) both players to produce high output.
C) player 1 to produce low output and player 2 to produce high output.
D) player 1 to produce high output and player 2 to produce low output.

Quizplus · Accepted Answer

In a simultaneous-move production game, the players choose their output levels simultaneously without knowing the other player's choice. To find the Nash equilibrium, we look for a situation where neither player has an incentive to change their choice given the other player's choice. In this game, if player 2 chooses to produce low output, then player 1's best response is also to produce low output (since it leads to a higher payoff for player 1 compared to producing high output). Similarly, if player 2 chooses to produce high output, then player 1's best response is to produce low output (again, leading to a higher payoff for player 1). Therefore, the only Nash equilibrium is for player 1 to produce low output and player 2 to produce high output.

Refer to the Following Payoff Matrix If the Payoff Matrix Is a Simultaneous-Move Production Game,the Nash