Assume That in a Price-Fixing Game, If Player a Breaks

question 4

Multiple Choice

Assume that in a price-fixing game, if Player A breaks the agreement in the first year, she earns $11 while Player B earns $5.However, if Player A breaks the agreement once, Player B decides to break the agreement for eternity, leaving each to receive $8 per year for the rest of their lives.If they both keep the agreement each receives $9 per year for the rest of their life.If the discount rate is 120 percent per period:

• A)Player A will prefer to break the agreement in the first year.
• B)Player A will prefer to break the agreement in the second year.
• C)Player A will prefer to keep the agreement throughout her life.
• D)Player A will prefer to keep the agreement only for the first five years.

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Definitions:

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A form of vitamin B9, essential for DNA synthesis and repair, red blood cell formation, and the development of the fetal nervous system during pregnancy.

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A parasitic disease caused by Toxoplasma gondii, which can infect most animals and humans, often contracted from contaminated food, soil, or through contact with cat feces.

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Physical injury to the brain that impairs its functions, potentially resulting in long-term cognitive, physical, or emotional disabilities.