Refer to the above payoff matrix for the profits (in $ millions) of two firms (A and B) making a decision to advertise or not. Which of the following is the outcome of the dominant strategy without cooperation?
A. Firm A chooses to advertise while firm B chooses not to advertise.
B. Firm A chooses not to advertise while firm B chooses to advertise.
C. There is no dominant strategy in this scenario.
D. Both firm A and firm B choose to advertise.
Answer: C
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When a tariff is imposed on a good, the ________ increases
A) domestic quantity purchased B) domestic quantity produced C) quantity imported D) quantity exported E) world price
If smartwatches are considered substitutes for smartphones, the decline in the price of smartphones would, all else equal
A) increase the quantity of smartwatches demanded. B) decrease the quantity of smartwatches demanded. C) increase the demand for smartwatches. D) decrease the demand for smartwatches.
Refer to Figure 8.3. Holding other variables constant, a decrease in income taxes accompanied by an increase in the skill level of workers will result in a
A) shift from curve D1 to curve D2 and a shift from curve S1 to curve S2. B) shift from curve D2 to curve D1 and a shift from curve S1 to curve S2. C) shift from curve D1 to curve D2 and a shift from curve S2 to curve S1. D) shift from curve D2 to curve D1 and a shift from curve S2 to curve S1.
Who actually pays an excise tax
A. is determined by income bracket. B. is determined by who the law assigns the tax. C. is wage and salary earners but not people who have only investment income. D. is determined by the change in prices and outputs caused by the tax.