Table 15.2.6 -Refer to Table 15.2.6. Firms a and B Can Conduct

Multiple Choice

Table 15.2.6

-Refer to Table 15.2.6. Firms A and B can conduct research and development (R&D) or not conduct it. R&D is costly but can increase the quality of the product and increase sales. The payoff matrix is the economic profits of the two firms and is given above, where the numbers are millions of dollars. The Nash equilibrium

A) occurs when both A and B conduct R&D.
B) occurs when only A conducts R&D.
C) occurs when only B conducts R&D.
D) occurs when neither A nor B conduct R&D.
E) does not occur