(Table) Boeing and Airbus Can Either Comply with a Cartel

question 200

Multiple Choice

(Table) Boeing and Airbus can either comply with a cartel agreement or cheat. Based on the table, where Boeing's payoff is listed first in each outcome, if this game is played only once, and each firm plays rationally
$\begin{array}{c}\quad \quad \quad \quad \quad \quad \quad \quad \text { Airbus }\\\begin{array}{ccc}&& \text { Cheat } & \text { Comply } \\ \text {Boeing } &\text { Cheat } & \$ 0, \$ 0 & \$ 3 \text { million, }-\$ 1 \text { million } \\&\text { Comply } & -\$ 1 \text { million, } \$ 3 \text { milton } & \$ 2 \text { million, } \$ 2 \text { million }\end{array}\end{array}$

• A) both Boeing and Airbus will cheat.
• B) Boeing will cheat and Airbus will comply.
• C) Boeing will comply and Airbus will cheat.
• D) both Boeing and Airbus will comply.

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Definitions:

Collecting Bank

A bank that processes checks and other negotiable instruments on behalf of a depositor, collecting funds from the bank on which the instruments are drawn.

Restrictive Endorsement

A limitation placed on the use of a check or other negotiable financial instrument, specifying conditions under which it can be transferred or cashed.

Stop Payment Order

A request made to a bank to cancel a check or payment that has not been processed yet.

Subrogation

The legal process by which one party stands in for another to claim restitution or indemnity from a third party for a loss or damage.