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Game Theory and Strategy · Quiz 1 · 26 Oct 2025 · September 2025 term

Question 1: Consider a duopoly game in which two firms simultaneously…

Question 1

+2 marksOne correct option

Consider a duopoly game in which two firms simultaneously and independently select prices that are greater than or equal to zero. Denote firm 1's price as P1P_1 and firm 2's price as P2P_2.

After the prices are set, consumers demand 10−P1+P210 - P_1 + P_2 units of the good that firm 1 produces, and they demand 10−P2+P110 - P_2 + P_1 units of the good that firm 2 produces. Assume that each firm produces at zero cost, so firm ii's payoff (profit) is (10−Pi+Pj)Pi(10 - P_i + P_j)P_i, where PiP_i is firm ii's price and PjP_j is the other firm's price. Answer the given sub questions based on this information:

  1. A
  2. B
  3. C
  4. D
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Correct answer

  • C
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Question 1 of 16 in the IIT Madras BS Game Theory and Strategy (Game Theory) Quiz 1 paper sat on 26 Oct 2025, in the September 2025 term (IIT M DEGREE AN EXAM QDB2 26 Oct 2025). It carries 2 marks.

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