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Suppose there are only two countries, Iraq and Iran, produci

Paper help Economics Suppose there are only two countries, Iraq and Iran, produci

Economics

Suppose there are only two countries, Iraq and Iran, produci

Suppose there are only two countries, Iraq and Iran, producing oil in the world (so they are both o… Show more Suppose there are only two countries, Iraq and Iran, producing oil in the world (so they are both oligopolists). Assume the leaders of the two countries believe he payoff to alternative oil production are as follows: Iraq’s Decesion Iraq’s Decesion High Production Low Production Iran’s Decesion High Production $40 billion profit for Iraq $40 billion profit for Iran $30 billion profit for Iraq $60 billion profit for Iran Iran’s Decesion Low Production $60 billion profit for Iraq $30 billion profit for Iran $50 billion profit for Iraq $50 billion profit for Iran (a): when Iraq chooses high production, Iran’s best decision is (a1) high production (a2) low production (b): when Iraq chooses low production, Iran’s best decision is (b1) high production (b2) low production (c): given answers of (a) and (b), Iran’s dominant strategy is (c1) high production (c2) low production (d): by symmetry, Iraq’s dominant strategy is (d1) high production (d2) low production (e): the Nash equilibrium is______________________________________________ • Show less

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