Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

14. Oligopoly

One-Time Games and the Prisoner's Dilemma

Microeconomics

14. Oligopoly

One-Time Games and the Prisoner's Dilemma

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Multiple Choice

Based on the information in the payoff matrix, which of the following is true?

This situation is not a prisoner's dilemma

If Walmart lowers its price, Target should keep its prices high

If Target lowers its price and Walmart does not, Target will earn $20 million economic profit

Both Walmart and Target would jointly be better off if they could each keep their prices high

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Verified step by step guidance

Examine the payoff matrix to understand the potential outcomes for both Walmart and Target based on their pricing strategies.

Identify the payoffs for each combination of strategies: (1) Both lower prices, (2) Walmart lowers prices while Target keeps prices, (3) Target lowers prices while Walmart keeps prices, and (4) Both keep prices.

Analyze the scenario where both Walmart and Target keep their prices high. In this case, Walmart earns $20 million and Target earns $20 million.

Compare this to the scenario where both lower their prices, resulting in each earning $5 million. This indicates that both would be better off keeping prices high.

Conclude that the statement 'Both Walmart and Target would jointly be better off if they could each keep their prices high' is true, as it results in higher profits for both compared to the other scenarios.