QUESTION 3 Part 1 Consider the following simultaneous game between Saudi Arabia and Nigeria with respect...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
QUESTION 3 Part 1 Consider the following simultaneous game between Saudi Arabia and Nigeria with respect to oil output. Understanding the Business Environment - AT 3 (Melb)-s1 2023 9| Page RMIT Classification: Trusted Nigeria (N) Low Output High Output Low Output N: $30m N: $50m SA: $200m SA: $150m Saudi Arabia (SA) N: $20m High Output SA: $160m SA: $100m N: $40m Suppose OPEC has only two producers, Saudi Arabia and Nigeria. Saudi Arabia has far more oil reserves and is the lower cost producer compared to Nigeria. The payoff matrix in the table above shows the profits earned per day by each country. 'Low output' corresponds to producing the OPEC assigned quota and 'high output' corresponds to producing the maximum capacity beyond the assigned quota. Assume the game was played only once. REQUIRED: (0) Does Saudi Arabia have a dominant strategy? Explain (ii) I What is the Nash Equilibrium in this game? Explain (2 marks) (2 marks) O Based on your answer in (ii) above, briefly compare Saudi Arabia's incentive to cooperate to that of Nigeria. 'Cooperate' in this game means both countries follow the low output quota agreed upon as a member of the OPEC cartel. QUESTION 3 Part 1 Consider the following simultaneous game between Saudi Arabia and Nigeria with respect to oil output. Understanding the Business Environment - AT 3 (Melb)-s1 2023 9| Page RMIT Classification: Trusted Nigeria (N) Low Output High Output Low Output N: $30m N: $50m SA: $200m SA: $150m Saudi Arabia (SA) N: $20m High Output SA: $160m SA: $100m N: $40m Suppose OPEC has only two producers, Saudi Arabia and Nigeria. Saudi Arabia has far more oil reserves and is the lower cost producer compared to Nigeria. The payoff matrix in the table above shows the profits earned per day by each country. 'Low output' corresponds to producing the OPEC assigned quota and 'high output' corresponds to producing the maximum capacity beyond the assigned quota. Assume the game was played only once. REQUIRED: (0) Does Saudi Arabia have a dominant strategy? Explain (ii) I What is the Nash Equilibrium in this game? Explain (2 marks) (2 marks) O Based on your answer in (ii) above, briefly compare Saudi Arabia's incentive to cooperate to that of Nigeria. 'Cooperate' in this game means both countries follow the low output quota agreed upon as a member of the OPEC cartel.
Expert Answer:
Related Book For
Posted Date:
Students also viewed these economics questions
-
CANMNMM January of this year. (a) Each item will be held in a record. Describe all the data structures that must refer to these records to implement the required functionality. Describe all the...
-
The Stag Hunt game is based on a story told by Jean Jacques Rousseau in his book Discourses on the Origin and Foundation of Inequality Among Men (1754). The story goes something like this: Two...
-
The table represents values of differentiable functions f and g and their first derivatives. Use the table of values to answer the questions that follow. Work all of the parts below the line. X f g...
-
Lowe's Companies Inc., a major competitor of The Home Depot in the home improvement business, operates over 1,700 stores. Lowe's recently reported the following balance sheet data (in millions): Year...
-
Layers of 23-cm-thick meat slabs (k = 0.47 W/mK and = 0.13 10 -6 m 2 /s) initially at a uniform temperature of 7C are to be frozen by refrigerated air at 230C flowing at a velocity of 1.4 m/s. The...
-
The cyclic relationship between \(P, V\) and \(T\) for a pure substance is given by (a) \(\left(\frac{\partial P}{\partial V} ight)_{T}\left(\frac{\partial P}{\partial T}...
-
Suppose that a gift shop in Myrtle Beach has an annual demand for 15,000 units for a souvenir kitchen magnet that it buys for $0.50 per unit. Assume that it costs $10 to place an order and the...
-
At the end of 2020, the new accountant discovered that in January 2019, the company accrued sales wages of $58,000 in excess of the correct amount. On February 1, 2021, the CEO of the company decided...
-
A 2 MW diesel engine power plant provides power to users with a maximum demand of 1.4 MW and Load factor 40% if investment in power plant installation = 44 million baht Total operating expenses Fuel...
-
An anti-hydrogen atom, A, is composed of one positron orbiting one antiproton just as a regular hydrogen atom is composed of one electron orbiting one proton. The difference is that each antiparticle...
-
Two Population Poissons. We can express the two population problem in a regression context using one explanatory variable. Specifically, suppose that \(x_{i}\) only takes on the values of zero and...
-
(a) About how many electrons are there in a copper penny, which has a mass of about \(0.003 \mathrm{~kg}\) ? (b) If you could isolate these electrons, how much charge would you have? (c) Estimate the...
-
Write both serial code and parallel code to find a maximum number stored in 2dimensional array. Plot execution times of several runs with a different number of threads and to see the speed up.
-
Four identical charged particles are constrained along an \(x\) axis. Identify one possible configuration of the particles that would leave one of them at rest at the origin when the others are fixed...
-
The UV-Visb spectra of salts of the following coordination complexes are determined in aqueous solution. which complex would the spectrum contain absorptions with the greatest emax values?...
-
A certain Christmas tree ornament is a silver sphere having a diameter of 8.50 cm. Determine an object location for which the size of the reflected image is three-fourths the size of the object. Use...
-
What is the theory of purchasing power parity? Does the theory give a complete explanation for movements in exchange rates in the long run? Briefly explain.
-
Before the start of the 2000 baseball season, the New York Mets decided that they didn't want Bobby Bonilla playing for them any longer. But Bonilla had a contract with the Mets for the 2000 season...
-
For the macroeconomic model in problem 23A.2, write the aggregate expenditure function. For GDP of $16,000, what is the value of aggregate expenditure, and what is the value of the unintended change...
-
Let \(X\) be a continuous random variable having probability density function \[f(x)= \begin{cases}2 e^{-2 x} & \text { for } x>0 \\ 0 & \text { elsewhere }\end{cases}\] (a) Find the moment...
-
Let \(X\) and \(Y\) be independent normal random variables with \[\begin{array}{lll}E(X)=4 & \text { and } & \sigma_{X}^{2}=25 \\E(Y)=3 & \text { and } & \sigma_{Y}^{2}=16\end{array}\] (a) Use moment...
-
Let \(X\) have the geometric distribution \[f(x)=p(1-p)^{x-1} \quad \text { for } x=1,2, \ldots\] (a) Obtain the moment generating function for \[t
Study smarter with the SolutionInn App