Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Chapter 26: Q. 6 - Problems (page 598)

Characterize each of the following as a positive-sum game, a zero-sum game, or a negative-sum game.

a. You play a card game in your dorm room with three other students. Each player brings \(5to the game to bet on the outcome, winner take all.

b. Two nations exchange goods in a mutually beneficial transaction.

c. A thousand people buy \)1 lottery tickets with a single payoff of $800.

Short Answer

Expert verified

(a) In a card game, the winner receives the entire amount bet. As a result, the game is one-sided.

(b) The business of exchanging goods benefits two countries as a positive-sum game.

(c) The $3800 lottery prize would be won by only one person; everyone else would lose.

Step by step solution

01

Given information 

The sentences are as follows: (a).

In your dorm room, play a card game.

02

Explanation (a).

(a)

The winner of a card game receives the entire amount bet. At the same time, the contributions of other students will be forfeited. As a result, the game is a zero-sum one.

03

Given information 

The sentences are as follows: (b).

In a mutually beneficial transaction, two countries exchange goods.

04

Explanation (b)

(b)

The business of exchanging goods benefits two countries. Both countries benefit in the business world. As a result, it could be considered a positive-sum game.

05

Given information

The given sentences are : (c)

A thousand people buy $1 lottery tickets

06

Explanation (c)

(c)

This could be regarded as a zero-sum game. Only one person would win the $3800 lottery jackpot; everyone else would lose.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Suppose that a company based in Dallas, Texas, confronts only four other rival firms. Its own market share is 35 percent, which ties it with the other largest producer and seller in the industry. The other three firms each have a 10 percent market share. What is the four-firm concentration ratio for this industry?

Consider two strategically dependent firms in an oligopolistic industry, Firm A and Firm B. Firm A knows that if it offers extended warranties on its products but Firm B does not, it will earn \(6 million in profits, and Firm B will earn \)2 million. Likewise, Firm B knows that if it offers extended warranties but Firm A does not, it will earn \(6 million in profits, and Firm A will earn\)2 million. The two firms know that if they both offer extended warranties on their products, each will earn \(3 million in profits. Finally, the two firms know that if neither offers extended warranties, each will earn \)5million in profits.

a. Set up a payoff matrix that fits the situation faced by these two firms.

b. What is the dominant strategy for each firm in this situation? Explain.

If there are 13 "All others" in the industry in Problem 26-1, each of which has a share of sales equal to 1 percent, what is the value of the Herfindahl-Hirschman Index for this industry?

If a dominant firm cannot maintain a cost advantage over other fringe firms in the industry, why might we anticipate that eventually its "dominance" might disappear? (Hint: What would happen to the number of fringe producers if the dominant firm were to earn economic profits and then what would happen over time to the dominant firm's profits?

Why do we suppose that people with college degrees when earn high hourly incomes have been among the customers of online-dating firms that provide fewer high-quality matches?

See all solutions

Recommended explanations on Economics Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free