Use the Information Below to Answer the Following Questions

question 7

Multiple Choice

Use the information below to answer the following questions.
Fact 15.2.1
Two firms, FastNet and SmartCast are the only Internet providers in a city. They have identical costs and one firm's service is a perfect substitute for the other firm's service. The industry is a natural duopoly. FastNet and SmartCast decide to collude and agree to share the market equally.
-Refer to Fact 15.2.1. What is the Nash equilibrium?

• A)Both firms cheat on the agreement.
• B)One firm cheats and one firm complies.
• C)Both firms comply with the agreement.
• D)New firms enter the market.
• E)Both firms charge the price that would exist in a perfectly competitive market.

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Definitions:

Dual-Process Theory

The proposal that judgment involves two types of thinking: a fast, efficient, but sometimes faulty set of strategies, and a slower, more laborious, but less risky set of strategies.

System II

Often refers to a mode of thinking that is slower, more deliberative, and more logical than fast, automatic, intuitive responses (System I thinking).

Quantifiable

Capable of being measured or expressed as a quantity, enabling numerical assessment or comparison.

System II

A term often used in psychology to describe the deliberative, analytical form of cognition that requires concentration and is slower than intuitive thinking.