Multiple Choice
Scenario: Two factories dump their waste in a river. This has led to the contamination of the water, which is also used by the factories in their production processes. The matrix below shows the profits of the two firms based on their respective decisions to dump their waste in the river. Note that each firm's choice affects the other firm's profit. The first number listed in each cell is the payoff to the row player, and the second number listed is the payoff to the column player.
-Refer to the scenario above.What is the equilibrium outcome in this case?
A) Both firms will dump their waste into the river.
B) Neither of the firms will dump its waste into the river.
C) Firm 1 will dump its waste into the river, and Firm 2 will not dump its waste.
D) Firm 2 will dump its waste into the river, and Firm 1 will not dump its waste.
Correct Answer:
Verified
Correct Answer:
Verified
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