A and B Form a Coalition and Share the Value

question 58

Multiple Choice

A and B form a coalition and share the value of the payoffs it produces.Their coalition is individually rational if:

• A)the core is blocked.
• B)individual payoffs exceed the respective values produced by A and B.
• C)payoffs to both are equal to their respective values.
• D)the core is empty.

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Definitions:

Average Variable Cost

The cost of each unit variable, determined by dividing the overall variable costs by the produced output quantity.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm's production increases.

Diminishing Returns

A principle stating that as more of a variable input is added to a fixed input, beyond some point, the additional output from the additional input will decrease.

Marginal Cost

The financial outlay required to create another unit of a good or service.