Prices of PlayStation 4 Game Systems Are Similar at Almost

question 156

Multiple Choice

Prices of PlayStation 4 game systems are similar at almost every large retailer and little price competition occurs among these retailers.An explanation for this is

• A)retailers are all price takers.
• B)retailers have lobbied state governments to allow them to collude legally to set the prices of certain products.
• C)pricing PlayStation 4 game systems is a repeated game. Over a long period of time, a cooperative equilibrium has been reached where retailers charge high prices for these systems.
• D)retailers are in a prisoner's dilemma which causes them to all charge the same price for PlayStation 4 game systems.

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Definitions:

Labor

The utilization of human physical and intellectual capacities in the generation of goods and services.

Plausible

Seeming reasonable or probable under the circumstances.

Production Function

A mathematical model that describes the relationship between inputs used in production and the resultant output.

Maximum Output

The highest amount of production that a company can achieve within a given period with the available resources.