When Economists Use Game Theory to Analyze the Strategic Behaviour

question 78

Multiple Choice

When economists use game theory to analyze the strategic behaviour of firms, which of the following do they take into account?

• A) the price-taking behaviours of oligopolists
• B) the allocative efficiency of their rivals
• C) the price-making behaviours of perfectly competitive markets
• D) the expected behaviours of rival firms because of the interdependence in the market

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Definitions:

Franchise

A business arrangement between an owner of a trade name or trademark and a person who sells goods or services under the trade name or trademark.

Limited Partnership

A partnership consisting of at least one general partner, who manages the business and is liable for its debts, and one or more limited partners, who contribute capital and share in profits but have limited liability.

General Partner

An owner of a partnership who is responsible for its management and is personally liable for its debts.

Limited Partner

An investor in a partnership who is not involved in day-to-day management and whose liability is limited to the amount invested.