Table 11-8 Suppose OPEC Has Only Two Producers, Saudi Arabia

question 251

Multiple Choice

Table 11-8
Suppose OPEC has only two producers, Saudi Arabia and Ecuador. Saudi Arabia has far more oil reserves and is the lower-cost producer compared to Ecuador. The payoff matrix in Table 11-8 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 11-8.Which of the following statements is true?

• A) The Nash equilibrium is a noncooperative, dominant strategy equilibrium.
• B) The Nash equilibrium is a cooperative equilibrium.
• C) The Nash equilibrium is a collusive equilibrium.
• D) There is no Nash equilibrium in this game because each party pursues its dominant strategy.

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Definitions:

Remedy

The means by which the enforcement of a right or the redress of a wrong is obtained.

Breach Of Contract

Occurs when one party fails to fulfill their obligations under a contract, leading to legal consequences for the defaulting party.

Contract Price

The total financial compensation agreed upon by all parties involved in a contract for the sale, purchase, or delivery of goods or services.

Market Price

The present cost for purchasing or selling an asset or service in a specific market.