In Game Theory ?
Correct answer: D. Firms consider the actions of others before deciding what to do
- A. Firms are assumed to act independently
- B. Firms are assumed to cooperate with each other
- C. Firms collude as part of cartel
- D. Firms consider the actions of others before deciding what to do
Explanation
Game theory studies decisions in which the payoff to one firm depends on what rival firms do. Therefore, each firm considers the likely actions and reactions of others before choosing its strategy.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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