Explain, using the prisoners’ dilemma analysis, why cooperation can be mutually beneficial, but if conditions prevent cooperation or collusion from happening, the outcome is worse for both parties.
Answer to relevant QuestionsWhat is the basis of the kinked-demand model? Explain the reason for the gap in the oligopolists’ marginal-revenue curve. How does this model explain price rigidity in oligopoly? Why do people want to meet others on-line instead of finding them in the “real” world? What impacts does currency fluctuations have on trade? Consider the employee monitoring game discussed in class (Lecture Notes 3, page 18): Suppose an employee in a company can either work or shirk. The manager of the company cannot directly observe whether the employee is ...Analyze the current economic situation in the U.S. as compared to five (5) years ago. Include interest rates, inflation, and unemployment in your analysis.
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