Refer to the payoff matrix. Suppose that Speedy Bike and Power Bike are the only two bicycle manufacturing firms serving the market. Both can choose large or small advertising budgets. If this is a repeated game with no cooperation or reciprocity, cell A:
A. is not the expected outcome of this game.
B. is the expected outcome of this game, and it is both a Nash equilibrium and a prisoner's dilemma.
C. is the expected outcome of this game, but it is neither a Nash equilibrium nor a prisoner's
dilemma.
D. is the expected outcome of this game, and it is a Nash equilibrium but not a prisoner's
dilemma.
B. is the expected outcome of this game, and it is both a Nash equilibrium and a prisoner's dilemma.
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Figure 4.3 illustrates the demand for tacos. Assume that tacos and beer are complements. A decrease in the price of beer would bring about a movement from
A) point a to point c. B) point c to point a. C) D2 to D0. D) D0 to D2.
You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your opportunity cost of seeing a movie this afternoon?
A. $8 B. $12 C. $57 D. $22