The Use of Game Theory in Studying the Behavior of Firms

Multiple Choice

The use of game theory in studying the behavior of firms in an oligopoly implies that firms _____

A) will be successful in colluding to raise prices.
B) follow suit when one firm raises its price.
C) will match other firms' price cuts but will not react to the other firm's price increases.
D) may attempt to avoid the worst outcome but may achieve a less-than-optimal outcome.
E) are usually unable to avoid the worst outcome.