Suppose There Are Only Two Firms in an Industry

question 27

Multiple Choice

Suppose there are only two firms in an industry.If they each set a high price,they each earn $5000.If they each set a low price,they each earn $2500.If one firm sets a low price while the other sets a high price,the low-price firm earns $7000 while the high-price firm earns $1000.Does a prisoners' dilemma exist?

• A)yes,because there is always a prisoner's dilemma in game theory
• B)it cannot be determined from the information provided
• C)yes,the Nash equilibrium does not maximize the joint payoff
• D)no,the Nash equilibrium does not maximize the joint payoff
• E)no,the Nash equilibrium does not maximize the individual payoff

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Definitions:

Middle Adulthood

Refers to the period of adulthood approximately between the ages of 45 and 65, characterized by physical, psychological, and social changes, including the transition to late adulthood.

Career Change

The process of transitioning from one profession or occupational field to another, often involving retraining or updating of skills.

Life-events Approach

A psychological theory that examines how life events, including significant transitions or traumatic experiences, influence an individual's development and behavior.

Middle Age

The period in adult life roughly between the ages of 40 and 65, often marked by increased challenges in life transitions and health.