Oscar and Felix are the only firms that clean offices in a large city. They agree to operate as a cartel. The payoff matrix above shows the economic profit that each firm can make. If the game is played only once, then ________
A) Felix and Oscar will each make $10 million economic profit
B) Felix will comply and Oscar will make $12 million economic profit
C) Felix and Oscar will each make $1 million economic profit
D) Felix will cheat and Oscar will make -$2 million economic profit
C
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Which of the following shifts the short-run aggregate supply curve?
I. changes in the size of the labor force II. changes in the money wage rate A) I only B) II only C) both I and II D) neither I nor II
You have just won a cash award of $500 for academic excellence
A) The substitution effect of this award will be larger than its income effect. B) The income effect of this award will be larger than its substitution effect. C) The substitution and income effects will be of identical size. D) It is impossible to know whether the substitution effect is larger than the income effect or vice versa.
The demand for dollars will increase in foreign-exchange markets if:
A. U.S. interest rates are high relative to those overseas. B. the U.S. is perceived to be a riskier place for investment relative to other nations. C. foreigners want to buy less U.S. goods. D. US consumers decide to buy more foreign goods than before.
The concept of economic efficiency refers to the size of the “economic pie” whereas the concept of equality refers to how the “pie” is distributed.
Answer the following statement true (T) or false (F)