Question

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You can can ignore the answers B, C and D above in the first question. I just needed some help with the bottom question with chart on the right.

Answer 1

When Saudi Arabia chooses low output , then Kuwait has more payoff in choosing high output.
When Saudi Arabia chooses high output , then Kuwait has more payoff in choosing high output.

Similarly, when Kuwait chooses low output ,then Saudi Arabia has more payoff in choosing high output.

And when Kuwait chooses high output ,then Saudi Arabia has more payoff in choosing high output.

This implies that the Nash equilibrium of this game is (High output, High output) , that is for Saudi Arabia to produce high output and Kuwait to produce high output. Hence, option(A) is correct.