ECON 2302 - Hw #10

If Rochelle and Alec operate as a profit-maximizing monopoly in the market for water, how much profit will each of them earn?

$9,000

In the prisoners' dilemma game, self-interest leads

All of the above are correct. - Each prisoner to confess. - To a breakdown of any agreement that the prisoners might have made before being questioned. - To an outcome that is not particularly good for either prisoner.

Table 17-15 This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B). If player B chooses Right, player A should choose

Middle and earn a payoff of 5.

What is the Nash Equilibrium in this dorm room cleaning game?

Nadia: Don't Clean Maddie: Don't Clean

Table 17-14. This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B). Which outcome is the Nash equilibrium in this game?

Up-Right

When an oligopoly market reaches a Nash equilibrium,

a firm will have chosen its best strategy, given the strategies chosen by other firms in the market.

In order to be successful, a cartel must

agree on the total level of production and on the amount produced by each member.

An equilibrium occurs in a game when

all players follow a strategy that they have no incentive to change.

As a group, oligopolists would always be better off if they would act collectively

as a single monopolist.

A distinguishing feature of an oligopolistic industry is the tension between

cooperation and self interest.

In an oligopoly, each firm knows that its profits

depend on both how much output it produces and how much output its rival firms produce.

The simplest type of oligopoly is

duopoly.

An agreement between two duopolists to function as a monopolist usually breaks down because

each duopolist wants a larger share of the market in order to capture more profit.

The prisoners' dilemma game

has a Nash equilibrium, but the Nash equilibrium outcome is not the outcome the players would agree to if they could cooperate with each other.

The equilibrium quantity in markets characterized by oligopoly is

higher than in monopoly markets and lower than in perfectly competitive markets.

A dominant strategy is one that

is best for the player, regardless of what strategies other players follow.

The equilibrium price in a market characterized by oligopoly is

lower than in monopoly markets and higher than in perfectly competitive markets.

As the number of firms in an oligopoly increases, the

price approaches marginal cost, and the quantity approaches the socially efficient level.

Copy of In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a

strategic situation.

In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a

strategic situation.