A Cooperative Equilibrium Results When Firms

question 25

Multiple Choice

A cooperative equilibrium results when firms

• A)choose the best strategy regardless of what other players do.
• B)choose the strategy that maximizes the total game payoff.
• C)choose the strategy that minimizes the payoff to other players.
• D)choose a strategy by random chance.

Identify the shapes and relationships among the ATC, AVC, and AFC curves.

Distinguish between short-run and long-run operational decisions in terms of costs and inputs.

Understand the principle of spreading overhead and how output level affects average fixed costs.

Recognize the conditions under which a firm decides to continue operations or shut down in the short run.