Question

21. While in general oligopoly firms desire to keep price higher, two heavy equipment manufacturers in a high CR4 industry might collude in an effort to prevent new entry or drive out competitors by engaging in predatory pricing tactics.

True

False

22. Game theory provides us with a general approach to understanding the behavior of firms when their choices are interdependent.

True

False

23. A dominant strategy exists when a player will always prefer one strategy, regardless of what his opponent chooses.

True

False

24. A payoff matrix is a table listing the expected economic profits resulting from different possible strategies.

True

False

25. A prisoner's dilemma can be described as a situation in which

a decision maker is uncertain about the potential punishment for something done in the past

producers act so as to avoid maximizing profits because of government retaliation

individual firms seeks to maximize their own profits with no regard for the group

the summation of individual demand curves creates an inelastic demand curve facing the industry

an individual decision maker finds it in his best interest to pursue a course of action that can lead to a less than desirable outcome for the group

Answer 1

22. Game theory provides us with a general approach to understanding the behavior of firms when their choices are interdependent.
True

23. A dominant strategy exists when a player will always prefer one strategy, regardless of what his opponent chooses.

True

24. A payoff matrix is a table listing the expected economic profits resulting from different possible strategies.

False
Payoff matrix is a table listing the economic profits resulting from different possible strategies.

25. A prisoner's dilemma can be described as a situation in which
an individual decision maker finds it in his best interest to pursue a course of action that can lead to a less than desirable outcome for the group