Please write your answer as precise as possible. Long answers are not necessary.Consider the oil production of OPEC. We simplify the situation to only two countries' case. Eachaction in the payoff matrix represents the amount of oil produced by each player. For example,"small" means a small amount of crude oil is produced; “large" means a large amount of crude oilis produced. The payoff pairs in the table represent each country's profit, respectively. For example,"Very high profit, Very low profitť" pair in the bottom left cell denotes a pair of payoffs that Irangets "Very high profit", and Saudi Arabia gets “Very low profit".Saudi ArabiaSmallLargeSmallHigh profit, High profitVery low profit, Very high profitIranLarge Very high profit, Very low profitLow profit, Low profit*Note: Very high profit > High profit > Low profit >Very low profitWhat outcome (Nash equilibrium) of this game between two countries would you predict? Useyour answer to explain why OPEC has failed to keep the oil price (profit) high in the long-run.

Game theory provides a mathematical method to determine the equilibrium strategy when two or more…

Consider the oil production of OPEC. We simplify the situation to only two countries' case. Each action in the payoff matrix represents the amount of oil produced by each player. For example, small" means a small amount of crude oil is produced; “large" means a large amount of crude oil s produced. The payoff pairs in the table represent each country’s profit, respectively. For example, Very high profit, Very low profit" pair in the bottom left cell denotes a pair of payoffs that Iran gets “Very high profit", and Saudi Arabia gets “Very low profit". Saudi Arabia Small Large Small High profit, High profit Very low profit, Very high profit Iran Large Very high profit, Very low profit Low profit, Low profit *Note: Very high profit > High profit > Low profit > Very low profit What outcome (Nash equilibrium) of this game between two countries would you predict? Use vour answer to explain why OPEC has failed to keep the oil price (profit) high in the long-run.

Consider the oil production of OPEC. We simplify the situation to only two countries' case. Each action in the payoff matrix represents the amount of oil produced by each player. For example, small" means a small amount of crude oil is produced; “large" means a large amount of crude oil s produced. The payoff pairs in the table represent each country’s profit, respectively. For example, Very high profit, Very low profit" pair in the bottom left cell denotes a pair of payoffs that Iran gets “Very high profit", and Saudi Arabia gets “Very low profit". Saudi Arabia Small Large Small High profit, High profit Very low profit, Very high profit Iran Large Very high profit, Very low profit Low profit, Low profit *Note: Very high profit > High profit > Low profit > Very low profit What outcome (Nash equilibrium) of this game between two countries would you predict? Use vour answer to explain why OPEC has failed to keep the oil price (profit) high in the long-run.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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