What is game theory and what light does it shed on the issues ...

[burton19126]

What is game theory and what light does it shed on the issues faced by duopolists?
 
  What will be an ideal response?

Question 2

If the marginal social cost of a television exceeds the marginal social benefit of a television, it would increase society's total surplus to decrease production of televisions.
 
  Indicate whether the statement is true or false

[cuttiesgirl16]

Answer to Question 1

Game theory is a tool economists use to analyze the behavior of oligopolistic firms because game theory is a tool to study strategic behavior. Game theory shows that because these firms are interdependent, the decisions they make to promote their own self-interest can wind up harming all the firms. The dilemma faced by duopolists is illustrated using game theory: Firms looking to earn for themselves the maximum possible profit can wind up earning less profit than if they had behaved less self-interestedly and more cooperatively.

Answer to Question 2

TRUE

[burton19126]

Thanks for the timely response, appreciate it

[xthemafja]

YES! Correct, THANKS for helping me on my review