Table 14-3 Suppose OPEC Has Only Two Producers, Saudi Arabia and Ecuador

question 17

Multiple Choice

Table 14-3

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 14-3 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 14-3.Is there a dominant strategy for Saudi Arabia and, if so, what is it?

• A)Yes, the dominant strategy is to produce a high output.
• B)Yes, the dominant strategy is to produce a low output.
• C)No, there is no dominant strategy.
• D)Yes, it has a dominant strategy depending on what Ecuador does.

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Definitions:

New Deal

A series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States during the 1930s in response to the Great Depression.

Share Our Wealth Society

A program proposed by Huey Long during the Great Depression in the United States, advocating for wealth redistribution to curb poverty and inequality.

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A policy proposal to provide all citizens with a certain amount of money annually from the government, intended to reduce poverty and inequality.

Huey Long

An influential and controversial American politician from Louisiana, known for his populist policies during the early 20th century.