Scenario: Two Firms in a Market Must Choose Between Two

Multiple Choice

Scenario: Two firms in a market must choose between two alternative strategies: X and Y. The figure below shows the game tree that these firms can use to make their decisions.

-Refer to the scenario above.In equilibrium,________.

A) Firm 1 will follow Strategy Y and Firm 2 will follow Strategy X
B) Firm 1 will follow Strategy X and Firm 2 will follow Strategy Y
C) both firms will follow Strategy X
D) both firms will follow Strategy Y