Why do economists refer to the pricing strategies of oligopoly firms as a prisoner's dilemma game?
What will be an ideal response?
A prisoners' dilemma is a game in which pursuing dominant strategies results in a noncooperative equilibrium that leaves everyone worse off than they would be if they could achieve the cooperative equilibrium. The outcome of noncooperative pricing (competition, in other words) will leave firms worse off than if they cooperated and set higher prices.
You might also like to view...
The mean (average) U.S. family income in 2012 was approximately
A) $15,000. B) $71,000. C) $51,000. D) $100,000.
An imperfectly competitive firm has the following total cost curve: C = 100 + 4Q. What is average total cost equal to when Q = 10?
What will be an ideal response?
If a dollar invested in the United States yields the same return as a dollar's worth of yen invested in Japan, then it implies that:
a. purchasing power parity exists. b. the foreign exchange market is in equilibrium. c. the dollar/yen exchange rate is fixed. d. interest rate parity exists. e. both the currencies are pegged to a fixed amount of gold.
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward