Refer to the payoff matrix. Suppose that Speedy Bike and Power Bike are the only two bicycle manufacturing firms serving the market. Both can choose large or small advertising budgets. If this is a repeated game and the firms cooperate to maximize profits, which of the following outcomes would we expect to occur?
A. In repeated playing, the outcomes would alternate between cells A and D.
B. In repeated playing, the outcomes would alternate between cells B and C.
C. The two firms will agree to keep their advertising budgets small over time.
D. The game will reach a Nash equilibrium at cell A.
B. In repeated playing, the outcomes would alternate between cells B and C.
You might also like to view...
If depreciation is less than investment ________
A) capital per-worker is falling B) capital per-worker is rising C) capital per-worker is constant D) capital per worker is greater than saving
Government restrictions on the use of an open-access resource
a. may improve efficiency b. will decrease efficiency c. are unnecessary d. contribute to pollution of the resource e. contribute to depletion of the resource
One point virtually all economists agree on when defining money is that: a. money must be spendable
b. money must be liquid. c. money must be accepted as payment. d. all of the above are correct.
If Carol's Crayon Factory's price exceeds its average total cost in the short run, then
a. it should shut down b. it is earning a profit c. profits are being maximized d. it should increase output e. it should decrease output