-The Only Two Firms in a Market Are Trying to Decide

Multiple Choice

-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 Nash equilibrium, Firm A will set a price of ________ and Firm B will set a price of ________.

A) $20; $20
B) $10; $10
C) $10; $20
D) $20; $10
E) $20; something, but more information is needed to determine Firm B's price