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13. Two firms are in the chocolate market. Each can choose to go for the high end of the market (high quality) or the low
13. Two firms are in the chocolate market. Each can choose to go for the high end of the market (high quality) or the low end (low quality). Profits are given by the payoff matrix in Figure 3. What outcomes, if any, are Nash equilibria? Figure 3 Firm 2 Low High Low -20, -30 900, 600 Firm 1 High 100, 800 50, 50 a. There is one equilibrium: Firm 1 plays Low, Firm 2 plays Low. b. There is one equilibrium: Firm 1 plays Low, Firm 2 plays High. C . There is one equilibrium: Firm 1 plays High, Firm 2 plays Low. d. There is one equilibrium: Firm 1 plays High, Firm 2 plays High. e. There are two equilibria: Firm 1 plays Low, Firm 2 plays High; and Firm 1 plays High, Firm 2 plays Low. f. All four outcomes are equilibria. g. None
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