Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
Textbook Question
Chapter 10, Problem 20P

May and Raj me the only two growers who provide organically grown corn to a local grocery store. They know that if they cooperated and produced less corn, they could raise the price of the com. If they work independently, they will each earn \$ 1 00 .

If they decide to work together and both lower their output, they call each earn \$ 15 0 .

If one person lowers output and the other does not, the person who lowers output will earn \$1 and the other person will capture the entire market and will earn \$ 2 00 .

Table 10.6 represents the choices available to Mary and Raj. What is the best choice for Raj if he is sole that Mary will cooperate? If Mary thinks Raj will cheat, what should Mary do and why? What is the prisoner’s dilemma result? What is the preferred choice if they could ensure cooperation? A = Work independently; B = Cooperate and Lower Output. (Each results entry lists Raj’s earnings first, and Mary’s earnings second.)

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Janeek and Raj are the only two growers who provide organically grown com to a local grocery store. They know that if they cooperated and produced less com, they could raise the price of the corn. If they work independently, they will each earn \$100. If they decide to work together and both lower their output, they can each earn \$150. if one person lowers output and the other does not, the person who lowers output will earn \$0 and the other person will capture the entire market and will earn \$200. Reference the game illustrated below where the first payout in each cell is for Janeek and the second is for Raj. (J.R) Independent Cooperate Independent (\$100, \$100) (\$0, \$200) What is the Nash Equilibrium for this game? Ⓒ(Cooperate, Cooperate) (Cooperate, Independent) (Independent, Cooperate) (Independent, Independent) Cooperate (\$200, 50) (\$150, \$150)
Mary and Raj are the only two growers who provide organically grown corn to a local grocery store. They know that if they cooperated and produced less corn, they could raise the price of the corn. If they work independently, they will each earn \$100. If they decide to work together and both lower their output, they can each earn \$150. If one person lowers output and the other does not, the person who lowers output will earn \$0 and the other person will capture the entire market and will earn \$200. Table represents the choices available to Mary and Raj. What is the best choice for Raj if he is sure that Mary will cooperate? If Mary thinks Raj will cheat, what should Mary do and why? What is the prisoner’s dilemma result? What is the preferred choice if they could ensure cooperation? A = Work independently; B = Cooperate and Lower Output
Mary and Raj are the only two growers who provide organically grown corn to a local grocery store. They know that if they cooperated and produced less corn, they could raise the price of the corn. If they work independently, they will each earn \$100. If they decide to work together and both lower their output, they can each earn \$150. If one person lowers output and the other does not, the person who lowers output will earn \$0 and the other person will capture the entire market and will earn \$200. The table represents the choices available to Mary and Raj. What is the best choice for Raj if he is sure that Mary will cooperate? Mary Keeps Producing Mary Lowers Output Raj Keeps Producing \$100, \$100 \$200, \$0 \$150, \$150 Raj Lowers Output \$0, \$200 O If Raj is sure Mary will cooperate, he should cheat. O If Raj is sure that Mary will cooperate, he should agree to work together. O If Raj is sure Mary will cooperate, he should work independently. Previous Next
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