ntent 7684109 2lcourss/18 SUM1 ECON2302010 jhussin MULTIPLE CHOICE. Choose the o
ID: 1163195 • Letter: N
Question
ntent 7684109 2lcourss/18 SUM1 ECON2302010 jhussin MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Table 13-3 Saudi Arabia's (5) Cholces Low Output High Output Low Output $100 milin profitS $75 milion proft N $20 million prott N: $12 million prof () Choices 580 milion proft : $60 million prof N: $30 million profit N: $20 milion prof Migh Output Suppose OPEC has only two producers, Soudi Arabia and Nigeria. Saudi Arabia has far more oil reserves and is the lower cost producer compared to Nigeria. The payoff matrix in Table 13-3 shows the profits earned per day by each country. "Low output" corresponds to producing the OPEC assigned quota and "high output" corresponds to producing the maximum capacity beyond the assigned quota 1) Refer to Table 13-3. Is there a dominant strategy for Saudi Arabia and, if so, what is it? A) Yes, the dominant strategy is to produce a high output. B) Yes, it has a dominant strategy depending on what Nigeria does C) Yes, the dominant strategy is to produce a low output, D) No, there is no dominant strategy 1) 2) Refer to Table 13-3. Is there a dominant strategy for Nigeria and, if so, what is it? A) Yes, the dominant strategy is to produce a high output B) Yes, the dominant strategy is to produce a low output C) Yes it has a dominant strategy depending on what Saudi Arabia does D) No, there is no dominant strategy 2) 3) Refer to Table 13-3. What is the Nash equilibrium in this game? ) A) In the Nash equilibrium Soudi Arabia produces a low output and earns a profit of $80 million and Nigeria produces a high output and $ 30 million respectively. B) There is no Nash equilibrium C) In the Nash equilibrium both Saudi Arabia and Nigeria produce a high output and earn a profit of $60 million and $20 milion respectively. D) In the Nash equilibrium both Saudi Arabia and Nigeria produce a low output and earn a profit of $100 million and $20 million respectivelyExplanation / Answer
Ans
1 Low output is the dominant strategy for Saudi Arabia as it leads to higher returns
2 again low output as it always leads to higher returns
3 low output, low output is Nash equilbrium because nobody changes its decision given decision of other. Is answer
4 c. There are hardly any barriers
5 A is right
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