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

question 248

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.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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Venting Anger

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An organized investigation conducted to answer specific questions or test hypotheses using scientific methods.

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A focus or priority placed on issues, policies, or initiatives that are considered of significant importance at a national level.

Competition

A situation in which two or more parties strive for a goal that cannot be shared, such as winning a race or achieving market dominance.