Suppose two companies, Macrosoft and Apricot, are considering whether to develop a new product, a touch-screen t-shirt. The payoffs to each of developing a touch-screen t-shirt depend upon the actions of the other, as shown in the payoff matrix below (the payoffs are given in millions of dollars).  If Macrosoft and Apricot make their decision at the same time, then which of the following statements is correct?

A. The game has more than one Nash equilibrium.
B. The only Nash equilibrium is that both develop a touch-screen t-shirt.
C. The game does not have a Nash equilibrium.
D. The only Nash equilibrium is that neither develops a touch-screen t-shirt.


Answer: A

Economics

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