Okay, so this question just to my left, the game above has a Nash equilibrium and it's got different situations for the Nash equilibrium or no Nash equilibrium. So we discovered right when we did our payoff matrix, we got a check and an X in this box, right? They both had a dominant strategy to lower their prices, right? They both had the dominant strategy to lower their prices and we saw a Nash equilibrium in that box where they both lower their prices. So that is our Nash equilibrium. Let's go ahead and find that in our answers. The game above has a Nash equilibrium B, right? Where both Walmart and Target lower prices. That is our answer B. Cool? Alright. Let's move on to the next one.

Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

14. Oligopoly

One-Time Games and the Prisoner's Dilemma

Microeconomics

14. Oligopoly

One-Time Games and the Prisoner's Dilemma

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Multiple Choice

The game above has:

A Nash equilibrium:both Walmart and Target keep prices high

A Nash equilibrium:both Walmart and Target lower prices

A Nash equilibrium:Target keeps prices high and Walmart lowers prices

No Nash equilibrium

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Verified step by step guidance

Identify the players in the game: Walmart and Target.

List the strategies available to each player: Walmart can either 'Lower Prices' or 'Keep Prices', and Target can either 'Lower Prices' or 'Keep Prices'.

Examine the payoff matrix: Each cell in the matrix shows the payoffs for Walmart and Target based on their chosen strategies. For example, if both lower prices, they each earn $5 million.

Determine the best response for each player given the other player's strategy: For Walmart, if Target lowers prices, Walmart's best response is to lower prices (earning $5 million instead of $1 million). If Target keeps prices, Walmart's best response is to lower prices (earning $30 million instead of $20 million).

Identify the Nash Equilibrium: A Nash Equilibrium occurs when each player's strategy is the best response to the other player's strategy. In this case, both Walmart and Target lowering prices is a Nash Equilibrium, as neither can benefit by unilaterally changing their strategy.