The Table Below Shows the Payoff Matrix in the Form

question 96

Multiple Choice

The table below shows the payoff matrix in the form of short-run profit for two firms,A and B,for two different strategies,investing in new capital or not investing.
-Refer to the payoff matrix above.The reason the game is a prisoner's dilemma is that

• A) both firms choose the same strategy.
• B) both firms have a dominant strategy.
• C) both firms find that their dominant strategies produce a better outcome than their dominated strategies.
• D) both firms find that their dominated strategies produce a better outcome than their dominant strategies.
• E) neither firm has a dominant strategy.

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Definitions:

Multiplicative Form

A mathematical approach where variables are multiplied to estimate outcomes in models or equations.

Systematic Component

In statistical analysis, the part of variation that can be attributed to identifiable factors, typically following a predictable pattern.

Seasonal Factor

Variations in business or trading activities that occur at the same time every year.

Simple Moving Average

A mathematical calculation that averages a set number of past data points to smooth out short-term fluctuations and identify trends.