The Rationale for Using Game Theory to Study Oligopoly Is

question 18

Multiple Choice

The rationale for using game theory to study oligopoly is that

• A) game theory is an exceedingly simple tool.
• B) each output produced by an oligopolist is determined by a linear program.
• C) it enables the government to dictate the outcome of a competitive situation.
• D) game theory allows consideration of the product transformation curve.
• E) in oligopoly, each firm must take account of its rivals' actions.

---

Definitions:

Compound Interest

The addition of interest to the principal sum of a loan or deposit, where interest also earns interest from then on.

Simple Interest

Simple interest is interest calculated only on the principal amount, or on that portion of the principal amount which remains unpaid.

Present Value

The present value of a sum of money or series of cash flows expected in the future, discounted at a certain rate of return.

Amortized Loan

A loan repaid in equal periodic amounts (or “killed off” over time).