Assume that in a price-fixing game, if Player A breaks the ...

[Cooldude101]

Assume that in a price-fixing game, if Player A breaks the agreement in the first year, she earns 11 while Player B earns 5 . However, if Player A breaks the agreement once, Player B decides to break the agreement for eternity, leaving each to receive 8 per year for the rest of their lives. If they both keep the agreement each receives 9 per year for the rest of their lives. If the discount rate is 30 percent per period:
 a. Player A will prefer to break the agreement in the first year.
  b. Player A will prefer to break the agreement in the second year.
  c. Player A will prefer to keep the agreement throughout her life.
  d. Player A will prefer to keep the agreement only for the first five years.

Question 2

A monopolistically competitive firm:
 a. tries to differentiate its product from the products of competitors.
 b. faces a perfectly elastic demand curve for its product.
 c. unlike a perfectly competitive firm, is able to earn positive economic profits in the long run.
  d. is always a retail establishment.

[memslove]

Answer to Question 1

C

Answer to Question 2

a

[Cooldude101]

TYSM

[Bigfoot1984]

Gracias!