Discussion
Assume that there are two firms in the industry. Firm I have to choose among five strategies and Firm II can react by adopting any one of six open strategies. Similarly, both firms have counter strategies. Thus, find how many total payoffs will be available for both the firms.
Answer: D
There are 30 payoffs.
In a two-firm game, each combination of one strategy from Firm I and one from Firm II gives one cell of the payoff matrix. With 5 strategies for Firm I and 6 for Firm II:
\[ 5 \times 6 = 30 \]
11 adds the strategies (\(5 + 6\)) instead of multiplying, and 22 doubles that. 6 counts only Firm II's strategies.
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