In a Competitive Situation Involving the Adoption of a Common

question 45

Multiple Choice

In a competitive situation involving the adoption of a common standard by all firms in the industry:

• A) each player should always adopt his own preferred standard to maximize profit.
• B) the players will agree upon the standard that maximizes collective profits.
• C) the use of dominant strategies will select the appropriate standard.
• D) there will be multiple equilibria supporting different possible standards.
• E) the players will agree on a compromise between their preferred standards.

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Definitions:

Economy

A system of production, distribution, and consumption of goods and services among a group of people.

Opportunity Cost

The detriment of not pursuing the second-top option when engaging in decision-making.

Manufacturing

The process of using machines, tools, and labor to produce goods for use or sale.

Export

Goods or services sold by a country to buyers in another country.