Mexico and the members of OPEC produce crude oil. Realizing that it would be in their best interests to form an agreement on production goals, a meeting is arranged and an informal, verbal agreement is reached. If both Mexico and OPEC abide by the agreement, then OPEC's profit will be $200 million and Mexico's profit will be $100 million. If both Mexico and OPEC cheat on the agreement, then OPEC's profit will be $175 million and Mexico's profit will be $80 million. If only OPEC cheats, then OPEC's profit will be $185 million, and Mexico's profit will be $60 million. If only Mexico cheats, then Mexico's profit will be $110 million, and OPEC's profit will be $150 million. You may find it helpful to fill in the payoff matrix below.
src="https://qoschin.com/media/4/ppg__rrr0818190951__f1q236g1.jpg" alt="" style="vertical-align: 0.0px;" height="203" width="377" />To Mexico, the payoff to cheating is either:
A. $80 million or $110 million.
B. $60 million or $100 million.
C. $100 million or $110 million.
D. $150 million or $200 million.
Answer: A
Economics
src="https://qoschin.com/media/4/ppg__rrr0818190951__f1q236g1.jpg" alt="" style="vertical-align: 0.0px;" height="203" width="377" />To Mexico, the payoff to cheating is either:
A. $80 million or $110 million.
B. $60 million or $100 million.
C. $100 million or $110 million.
D. $150 million or $200 million.
Answer: A
You might also like to view...
Under long-run equilibrium in perfect competition, each firm operates at the minimum point of its average-variable-cost curve
a. True b. False Indicate whether the statement is true or false
_________________—a term referring to the process whereby an economy as a whole turns economic inputs such as human capital, physical capital, and technology into output measured as GDP per capita.
a. production function b. aggregate production function c. innovation d. technological change