Firms faced with prisoners' dilemma can always make more profits by engaging in opportunistic behavior. Why is this type of behavior NOT commonly found even in oligopolistic markets?
What will be an ideal response?
The prisoners' dilemma describes noncooperative behavior, but in reality most businesses engage in repeat transactions so that cooperation is likely to occur. One cooperative strategy is tit-for-tat behavior.
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If an industry were perfectly competitive, the four-firm concentration ratio would be close to ________ and the Herfindahl-Hirschman index would be close to ________
A) 0; 0 B) 0; 100 C) 100; 0. D) 100; 100.
Assume that Economy A and Economy B have the same resources, but that individuals in Economy A have specialized whereas individuals in Economy B have not. Given this information, you can determine that
A) Economy A will have a higher output than Economy B. B) Economy A will have a lower output than Economy B. C) Economy A and Economy B will have identical outputs. D) individuals in Economy A will have lower incomes than individuals in Economy B.