Mary and Sam are the only two growers who provide organically grown corn to Woolworths supermarkets. The table below shows each person’s profits, depending on what price Mary and Sam charge.

		Mary chooses
		Low price	High price
Sam chooses	Low price	Sam earns $100 Mary earns $100	Sam earns $200 Mary earns $0
	High price	Sam earns $0 Mary earns $200	Sam earns $150 Mary earns $150

a) What is the prisoner’s dilemma result? Explain how you arrived at the solution.

b) What is the best choice for Sam if he is sure that Mary will cooperate? If Mary thinks Sam will cheat, what should Mary do, and why?

c) Explain an oligopolistic market structure with an example.

Transcribed Image Text:

Job or Indirect Labor 007 009 Machine repair Total Su. M 5 3 4 4 8 Tu. LO 5 3 8 W 3 LO 5 8 Th. 5.0 6.5 11.5 F 6 5 11 Sa. 6.5 6.5 Total 24.0 22.5 10.5 57.0 Job or Indirect Labor 007 009 Machine repair Total Su. M 5 3 4 4 8 Tu. LO 5 3 8 W 3 LO 5 8 Th. 5.0 6.5 11.5 F 6 5 11 Sa. 6.5 6.5 Total 24.0 22.5 10.5 57.0

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1 The Best choice for Sam if he is sure that Mary will cooperate will be the 150 and 150 where both ... View the full answer