The Marginal Cost of Providing Another Viewer with Access to HBO

question 105

Multiple Choice

The marginal cost of providing another viewer with access to HBO is zero. Since only people who pay for HBO can watch it:

• A)fewer than the socially optimal number of people will have access to HBO.
• B)more than the socially optimal number of people will have access HBO.
• C)HBO will not be profitable in the long run.
• D)access to HBO is nonexcludable.

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Definitions:

Dominant Strategy

In game theory, a strategy that is optimal for a player, regardless of the strategies chosen by other players in the game.

Nash Equilibrium

A concept in game theory where no player can benefit by changing strategies if other players keep their strategies unchanged.

Payoff Matrix

A table that shows the potential outcomes of different decisions in a strategic situation, used in game theory to analyze choices and consequences.

Zero-Sum Game

A situation in game theory where one participant's gain or loss is exactly balanced by the losses or gains of the other participants.