Consider a market with two firms, Krispy Kreme Doughnuts (KK) and Dunkin' Donuts (DD), that produce donuts. Both firms must choose whether to charge a high price ($1.25) or a low price ($0.85) for their donuts. These price strategies with corresponding profits are illustrated in the payoff matrix to the right. Krispy Kreme's profits are in red and Dunkin' Donuts' are in blue. Krispy Kreme's dominant strategy is to pick a price of $1.25 , and Dunkin' Donuts' dominant strategy is to pick a price of $0.85 . What is the Nash equilibrium for this game? A. Krispy Kreme will choose a price of $1.25 and Dunkin' Donuts will choose a price of $0.85. B. Krispy Kreme and Dunkin' Donuts will both choose a price of $1.25. C. Krispy Kreme will choose a price of $0.85 and Dunkin' Donuts will choose a price of $1.25. D. Krispy Kreme and Dunkin' Donuts will both choose a price of $0.85. E. The game has no Nash equilibrium.

D. Krispy Kreme and Dunkin' Donuts will both choose a price of $0.85.

Explanation:

DD - Dunkin' Donuts

KK - Krispy Kreme

If DD choose price to be $1.25, KK will choose price to be $0.85 because it gives them profit of $975 among $850 / $975

If DD choose price to be $0.85, KK will choose price to be $0.85 because it gives them profit of $650 among $250 / $650

Thus, KK have a dominant strategy to choose price = $0.85 no matter what DD choose.

If KK choose price to be $1.25, DD will choose price to be $0.85 because it gives them profit of $975 among $850 / $975

If KK choose price to be $0.85, DD will choose price to be $0.85 because it gives them profit of $650 among $250 / $650

Thus, DD have a dominant strategy to choose price = $0.85 no matter what KK choose.

Both firms have a dominant strategy of choosing price = $0.85 which creates a Nash equilibrium.

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explanation:

the answer is     d. in our global economy, most job growth will be in services, but manufacturing jobs will exist, too.