The Term "Strategy" in Terms of Game Theory Refers to _____

question 96

Multiple Choice

The term "strategy" in terms of game theory refers to _____

• A)the tendency of firms to earn zero economic profit in the long run.
• B)the tendency of firms in an oligopoly to exit the market in the long run.
• C)each firm's game plan for making decisions.
• D)each firm's decision to charge a higher price than the price charged by the rival firm in an industry.
• E)the tendency of collusive firms to generate normal profits.

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Definitions:

Covariance

A measure of the degree to which returns on two risky assets move in tandem. A positive covariance means that asset returns move together. A negative covariance means they vary inversely.

Variance

A measure of the dispersion of a random variable. Equals the expected value of the squared deviation from the mean.

Fairly-Priced Securities

Securities that are believed to be priced appropriately according to their risk level and the expected rate of return.

Positive Betas

A term referring to financial securities that have a beta greater than zero, indicating that their returns generally move in the same direction as the market.