Game theory is not useful in understanding perfect competition because in a perfectly competitive market:
A. there are too many firms to be able to model their behavior accurately using game theory.
B. the payoffs to firms' choices are unknown.
C. each firm only cares about its own profit, so there is no interdependence.
D. no single firm can influence the market price, so firms' decisions are not interdependent.
Answer: D
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A) positive externality B) negative externality C) pecuniary externality D) conspicuous externality
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