Consider the Following Game in Which Two Firms Decide How

question 96

Multiple Choice

Consider the following game in which two firms decide how much of a homogeneous good to produce. The annual profit payoffs for each firm are stated in the cell of the game matrix, and Firm A's payoffs appear first in the payoff pairs: What are the dominant strategies in this game?

• A) Both firms produce low levels of output.
• B) Both firms produce high levels of output.
• C) Firm A's dominant strategy is to produce low levels of output, but Firm B does not have a dominant strategy.
• D) Firm B's dominant strategy is to produce low levels of output, but Firm A does not have a dominant strategy.
• E) Neither firm has a dominant strategy.

---

Definitions:

International Trade

The transfer of commodities, services, and finance across the borders or territories of various nations.

Volume Of Trade

The total quantity of shares or contracts traded for a particular financial instrument or market during a given period.

Transportation Costs

Expenses associated with the movement of goods or services from one location to another, affecting supply chain and final pricing.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing an option.