The principal advantage of the game theory approach is that it allows us to
a. take all possible information into consideration before developing a theory
b. better understand why the firm in a competitive industry avoids games
c. better understand how the government should regulate a natural monopoly
d. better understand decision making when one person's choices affect another person's choices
e. understand the relationship between the firm and the industry demand curves
Question 2
When an activity results in the creation of external benefits, markets will produce more than the socially optimal level of that activity.
a. True
b. False
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