Suppose there are 2 players in a non-cooperative game theory situation. Company ABC and Company JKL both sell books and can choose to charge a high price or a low price for a particular book that is very popular. The following matrix contains the payoffs that each company receives under 4 scenarios. The first number in each cell refers to the payoffs for Company X.

	Company JKL
Company ABC		Low Price	High Price
	Low Price	500, 400	400, 500
	High Price	100, 0	50, 100

If both firms make their decisions simultaneously, the Nash equilibrium will be

	A.	Company ABC would charge a Low Price and Company JKL would charge a High Price
	B.	Company ABC would charge a High Price and Company JKL would charge a High Price
	C.	Company ABC would charge a High Price and Company JKL would charge a Low Price
	D.	Company ABC would charge a Low Price and Company JKL would charge a Low Price
	E.	There would be no equilibrium in the game

 

Answer rating: 100% (QA)

The Nash equilibrium will be D Company ABC would charge a Low Price ... View the full answer