Suppose Two Companies, Macrosoft and Apricot, Are Considering Whether to Develop

Multiple Choice

Suppose two companies, Macrosoft and Apricot, are considering whether to develop a new product, a touch-screen t-shirt. The payoffs to each of developing a touch-screen t-shirt depend upon the actions of the other, as shown in the payoff matrix below (the payoffs are given in millions of dollars) . Suppose Apricot makes its decision first, and then Macrosoft makes its decision after seeing Apricot's choice. What will be the equilibrium outcome of this game?

A) Apricot will develop a touch-screen t-shirt, and Macrosoft will not.
B) Macrosoft will develop a touch-screen t-shirt, and Apricot will not.
C) Both Apricot and Macrosoft will develop a touch-screen t-shirt.
D) Neither Apricot nor Macrosoft will develop a touch-screen t-shirt.