If You Are Following a Tit-For-Tat Strategy in a Repeated

question 8

Multiple Choice

If you are following a tit-for-tat strategy in a repeated game,and your opponent makes a cooperative move,you will:

• A) collude.
• B) make a cooperative move in the next round.
• C) price compete.
• D) defect.

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Definitions:

Marginal Cost

The increment in sum total cost that comes with the production of an additional single unit of a good or service.

Marginal Revenue

The boost in revenue achieved by selling an additional unit of a good or service.

Price Taker

A buyer or seller that is unable to influence the market price of a product or service.

Marginal Revenue Curve

A graphical representation showing how the revenue from selling one more unit of a good or service changes as production volume changes.