Consider a market with two firms, Coke and Pepsi, that produce soft drinks. Both firms must choose whether to charge a high price ($1.25) or a low price ($0.65) for their soft drinks. These price strategies with corresponding profits are depicted in the payoff matrix to the right. Coke's profits are in red and Pepsi's are in blue. Coke's dominant strategy is to pick a price of and Pepsi's dominant strategy is to pick a price of $ What is the Nash equilibrium for this game? O A. Coke and Pepsi will both choose a price of $1.25. OB. Coke will choose a price of $0.65 and Pepsi will choose a price of $1.25. OC. Coke will choose a price of $1.25 and Pepsi will choose a price of $0.65. OD. Coke and Pepsi will both choose a price of $0.65. Price $1.25 = Pepsi Price = $0.65 Coke Price $1.25 Price = $0.65 $225 $800 $900 $800 $225 $550 $900 $550

Consider a market with two firms, Coke and Pepsi, that produce soft drinks. Both firms must choose whether to charge a high price ($1.25) or a low price ($0.65) for their soft drinks. These price strategies with corresponding profits are depicted in the payoff matrix to the right. Coke's profits are in red and Pepsi's are in blue. Coke's dominant strategy is to pick a price of and Pepsi's dominant strategy is to pick a price of $ What is the Nash equilibrium for this game? O A. Coke and Pepsi will both choose a price of $1.25. OB. Coke will choose a price of $0.65 and Pepsi will choose a price of $1.25. OC. Coke will choose a price of $1.25 and Pepsi will choose a price of $0.65. OD. Coke and Pepsi will both choose a price of $0.65. Price $1.25 = Pepsi Price = $0.65 Coke Price $1.25 Price = $0.65 $225 $800 $900 $800 $225 $550 $900 $550

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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