In the Game in Which Two Oil Companies Own Adjacent

question 21

Multiple Choice

In the game in which two oil companies own adjacent oil fields, the companies will not use the oil efficiently because

• A)neither company has a dominant strategy in the game.
• B)the companies collude and produce a quantity of oil that is less than the socially-efficient quantity.
• C)the pool from which they recover the oil is a common resource.
• D)the pool from which they recover the oil is not large enough to allow both companies to earn a positive profit.

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Definitions:

Walmart

An American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores, known for its scale and efficiency in supply chain management.

Price Discrimination

The business strategy of selling the same product to different customers at different prices based on their willingness to pay.

Senior Citizens

Individuals of an older age, often defined by legal or social age thresholds, who may be eligible for certain benefits.

Hotel Chains

A series of hotels under the same brand or management, offering standardized accommodations and services across different locations.