Consider the market for oil. Suppose for simplicity that there are only two oil producing countries-Saudi Arabia and Kuwait. Both countries must choose whether to produce a low output or a high output. These output strategies with corresponding profits are depicted in the payoff matrix. Kuwait's profits are in red and Saudi Arabia's are in blue. Suppose the two countries form a cartel. What is the cooperative equilibrium? OA. A cooperative equilibrium does not exist for this game. B. The cooperative equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a low output. C. The cooperative equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a high output. D. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a low output. E. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a high output. What is the Nash equilibrium for this game? OA. The Nash equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a low output. B. The Nash equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a high output. ○ C. The Nash equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a low output. OD. The Nash equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a high output. OE. A Nash equilibrium does not exist for this game. Low Output Saudi Arabia High Output Kuwait Low Output High Output $120 $75 $8 $13 $95 $70 $5 $8
Consider the market for oil. Suppose for simplicity that there are only two oil producing countries-Saudi Arabia and Kuwait. Both countries must choose whether to produce a low output or a high output. These output strategies with corresponding profits are depicted in the payoff matrix. Kuwait's profits are in red and Saudi Arabia's are in blue. Suppose the two countries form a cartel. What is the cooperative equilibrium? OA. A cooperative equilibrium does not exist for this game. B. The cooperative equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a low output. C. The cooperative equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a high output. D. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a low output. E. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a high output. What is the Nash equilibrium for this game? OA. The Nash equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a low output. B. The Nash equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a high output. ○ C. The Nash equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a low output. OD. The Nash equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a high output. OE. A Nash equilibrium does not exist for this game. Low Output Saudi Arabia High Output Kuwait Low Output High Output $120 $75 $8 $13 $95 $70 $5 $8
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 13PAE
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