What is a tool that allows economists to analyze the strategic behaviour of firms in a market?
A) network externalities
B) payoff strategies
C) monopolistic equilibrium
D) game theory

Question

Quizplus · Accepted Answer

Game theory allows economists to model and analyze the strategic behavior of firms in a market. It can be used to study various forms of competition, such as oligopoly and duopoly, and to examine the effects of different pricing and production strategies on firm profits and market outcomes. Network externalities and monopolistic equilibrium are related but narrower concepts that do not capture the full range of strategic interactions among firms. Payoff strategies are a potential application of game theory, but they alone do not represent a tool for analyzing strategic behavior.

What Is a Tool That Allows Economists to Analyze the Strategic