ECON 204 Final Exam Fall 2017 Price $5 Price s10 S54 Price = $5 S60 $80 Firm B\'
ID: 1130601 • Letter: E
Question
ECON 204 Final Exam Fall 2017 Price $5 Price s10 S54 Price = $5 S60 $80 Firm B's Strategies $80 $75 Price = $10 S54 $75 20. The only two firms in a market are trying to decide what price to charge. The payoff matrix for this duopoly game is shown above. The payoffs are thousands of dollars of economic profit. In the above game, in the Nash equilibrium, A. Firm A and Firm B are both making $80,000 in economic profit B. Firm A and Firm B are both making $75,000 in economic profit. C. Firm A is making $80,000 and Firm B is making $75,000 in economic profit. D. Firm A and Firm B are both making $60,000 in economic profit.Explanation / Answer
Answer: D
When firm A chooses p= 5, firm B chooses p=5 with payoff 60
When firm A chooses p=10 ,firm B chooses p=5 with payoff 80
When firm B chooses ,p=5 , firm A chooses p=5,with payoff 60
When firm b chooses p=10, Firm A chooses =5 with payoff 80.
nash eqm is 60,60
Hence, D is the correct answer.
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