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(Table) Boeing and Airbus Can Either Comply with a Cartel

Question 102

Multiple Choice

(Table) Boeing and Airbus can either comply with a cartel agreement or cheat. Based on the table, where Boeing's payoff is listed first in each outcome, if this game is played repeatedly and both firms adopt strategies such that the cooperative equilibrium emerges
 Airbus  Cheat  Comply Boeing  Cheat $0,$0$3 million, $1 million  Comply $1 million, $3 milton $2 million, $2 million \begin{array}{c}\quad \quad \quad \quad \quad \quad \quad \quad \text { Airbus }\\\begin{array}{ccc}&& \text { Cheat } & \text { Comply } \\ \text {Boeing } &\text { Cheat } & \$ 0, \$ 0 & \$ 3 \text { million, }-\$ 1 \text { million } \\&\text { Comply } & -\$ 1 \text { million, } \$ 3 \text { milton } & \$ 2 \text { million, } \$ 2 \text { million }\end{array}\end{array}


A) both Boeing and Airbus will cheat.
B) Boeing will cheat and Airbus will comply.
C) Boeing will comply and Airbus will cheat.
D) both Boeing and Airbus will comply.

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