The Prisoners' Dilemma Is Used to Illustrate the Basic Idea

question 102

Multiple Choice

The prisoners' dilemma is used to illustrate the basic idea that

• A) oligopolistic firms would be better off if they collude, but each has an incentive to cheat on the collusive agreement.
• B) oligopolistic firms are always worse off when they collude.
• C) oligopolistic firms never have an incentive to cheat on collusive agreements, unlike prisoners.
• D) students who cheat on economics exams end up in jail.

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Definitions:

Operating Contribution

The portion of revenue that remains after variable expenses are subtracted, indicating how much contributes to covering fixed costs and generating profit.

Restricted Contribution

Funds given to an organization with specific conditions attached regarding their use.

Donation Revenue

Income received from giving without the expectation of receiving something in return, typically for non-profit organizations.

Restricted Fund Method

An accounting strategy used for tracking and reporting separately on resources that are restricted by donors for specific purposes.