Table 11-14

-Refer to Table 11-14.Saudi Arabia and Ecuador must decide how much oil to produce.Since the demand for oil is inelastic,relatively low production rates drive up prices and profits.Saudi Arabia,the world's largest and lowest-cost producer,is able to influence market price; it has an incentive to keep output low.Ecuador,on the other hand,is a relatively high-cost producer with much smaller reserves.Use the payoff matrix in Table 11-14 to answer the following questions.
a.What is the dominant strategy for Saudi Arabia?
b.What is the dominant strategy for Ecuador?
c.What is the Nash equilibrium?

Question

Table 11-14
 
-Refer to Table 11-14.Saudi Arabia and Ecuador must decide how much oil to produce.Since the demand for oil is inelastic,relatively low production rates drive up prices and profits.Saudi Arabia,the world's largest and lowest-cost producer,is able to influence market price; it has an incentive to keep output low.Ecuador,on the other hand,is a relatively high-cost producer with much smaller reserves.Use the payoff matrix in Table 11-14 to answer the following questions.
a.What is the dominant strategy for Saudi Arabia?
b.What is the dominant strategy for Ecuador?
c.What is the Nash equilibrium?

Quizplus · Accepted Answer

The Answer of Table 11-14
 
-Refer to Table 11-14.Saudi Arabia and Ecuador must decide how much oil to produce.Since the demand for oil is inelastic,relatively low production rates drive up prices and profits.Saudi Arabia,the world's largest and lowest-cost producer,is able to influence market price; it has an incentive to keep output low.Ecuador,on the other hand,is a relatively high-cost producer with much smaller reserves.Use the payoff matrix in Table 11-14 to answer the following questions.
a.What is the dominant strategy for Saudi Arabia?
b.What is the dominant strategy for Ecuador?
c.What is the Nash equilibrium?

Table 11-14 -Refer to Table 11-14.Saudi Arabia and Ecuador Must Decide How