Table 112 Suppose OPEC Has Only Two Producers, Saudi Arabia

question 2

Multiple Choice

Table 11.2 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 11.2 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 11.2.Which of the following statements is true?

• A)The Nash equilibrium is a non-cooperative, dominant strategy equilibrium.
• B)The Nash equilibrium is a cooperative equilibrium.
• C)The Nash equilibrium is a collusive equilibrium.
• D)There is no Nash equilibrium in this game because each party pursues its dominant strategy.

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Definitions:

LIFO Reserve

The difference in the value of inventory under the Last-In-First-Out (LIFO) method compared to the First-In-First-Out (FIFO) method, reflecting the impact of inflation on inventory costs.

Disclosure

The action of making new or important information known, especially relating to business operations, financial conditions, or regulatory compliance.

Specific Identification Method

An inventory valuation method that tracks the actual cost of each individual item of inventory.

Inventory Accounting

The process of valuing a company's inventory, including raw materials, work-in-progress, and finished goods.