Multiple Choice
Refer to the normal-form game of price competition shown below. 
Firm B is the incumbent facing potential entry from its rival,firm A. Firm A's strategies consist of {entry, stay out}. Firm B's strategies are then {hard if entry; hard if stay out; soft if entry; soft if stay out}. Find the subgame Nash equilibrium to this game, if one exists.
A) Firm A plays {stay out}; firm B plays {hard if entry}.
B) Firm A plays {entry}; firm B plays {hard if entry}.
C) Firm A plays {entry}; firm B plays {soft if entry}.
D) There is no subgame Nash equilibrium to this game.
Correct Answer:
Verified
Correct Answer:
Verified
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