Table 12.3 Suppose OPEC Has Only Two Producers, Saudi Arabia and Nigeria

question 123

Multiple Choice

Table 12.3

Suppose OPEC has only two producers, Saudi Arabia and Nigeria. Saudi Arabia has far more oil reserves and is the lower cost producer compared to Nigeria. The payoff matrix in Table 12.3 shows the profits earned per day by each country. "Low output" corresponds to producing the OPEC assigned quota and "high output" corresponds to producing the maximum capacity beyond the assigned quota.
-Refer to Table 12.3.What is the Nash equilibrium in this game?

• A)In the Nash equilibrium both Saudi Arabia and Nigeria produce a low output and earn a profit of $100 million and $20 million respectively.
• B)In the Nash equilibrium both Saudi Arabia and Nigeria produce a high output and earn a profit of $60 million and $20 million respectively.
• C)In the Nash equilibrium Saudi Arabia produces a low output and earns a profit of $80 million and Nigeria produces a high output and $30 million respectively.
• D)There is no Nash equilibrium.

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Definitions:

BCG Matrix

A strategic business tool designed by the Boston Consulting Group to help organizations analyze their product lines or business units for decision-making purposes.

Market Share

The proportion of an industry's sales that a specific company secures.

High-Growth Market

Markets characterized by rapid expansion and increased demand, offering significant opportunities for businesses.

Strategy Requires Leaders

The necessity for individuals who can devise, communicate, and implement plans to achieve organizational goals.