Big Pig and Little Pig Have Two Possible Strategies, Press

question 6

Multiple Choice

Big Pig and Little Pig have two possible strategies, Press the Button, and Wait at the Trough.If both pigs choose Wait, both get 1.If both pigs Press the Button, then Big Pig gets 6 and Little Pig gets 4.If Little Pig Presses the Button and Big Pig Waits at the Trough, then Big Pig gets 10 and Little Pig gets 0.Finally, if Big Pig Presses the Button and Little Pig Waits, then Big Pig gets 6 and Little Pig gets 2.In Nash equilibrium,

• A)Little Pig will get a payoff of 4 and Big Pig will get a payoff of 6.
• B)Little Pig will get a payoff of 2 and Big Pig will get a payoff of 6.
• C)both pigs will wait at the trough.
• D)Little Pig will get a payoff of zero.
• E)the pigs must be using mixed strategies.

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Definitions:

Price Level

The price level is the average of current prices across the entire spectrum of goods and services produced in the economy, often used as a measure of inflation.

Exchange Rate

The monetary value of one currency when exchanged for another.

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An arrangement whereby the currencies of most countries are convertible into gold at a fixed rate.

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A global conflict that occurred from 1914 to 1918, involving many of the world's great powers divided into two opposing alliances: the Allies and the Central Powers.