Table 16-19 Brian and Matt Own the Only Two Bicycle Repair Shops

Table 16-19
Brian and Matt own the only two bicycle repair shops in town. Each must choose between a low price for repair work and a high price. The annual economic profit from each strategy is indicated in the table. The profits are shown as (Matt, Brian) in each cell.

-Refer to Table 16-19.Which of the following statements is correct if Brian and Matt will play this game only once?

A) The Nash equilibrium is for players to choose the low price.
B) A Nash equilibrium cannot be established unless Brian and Matt collude.
C) A Nash equilibrium cannot be established without the players repeating the game.
D) The Nash equilibrium price is the low price.

Correct Answer:

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