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

question 127

Multiple Choice

Table 14-3

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 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 Nigeria does.

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