Question

Because oligopolies tend to be unique in a variety of ways there isn’t a general theory of their behavior (like with monopolies). Why do economists often use game theory for oligopolies?

Answer 1

Answer:

B) Because game theory is used to study conflict and cooperation in a competitive arena.

Explanation:

Oligopoly refers to the situation when the competition is limited which means that there are very few firms competing against each other.

Game theory: Studying strategies and actions of firms in a competitive market.

Economists use this study to explain oligopoly because companies have their own interests, and they often take actions which are against other companies so by studying game theory they understand the situation when companies are cooperating or are in conflict.

Answer 2

Answer:

Economists use game theory got Oligopoly because It helps to predict likely outcomes when firms engage in certain behaviors, such as price-fixing and collusion.

Explanation:

Game theory is a theoretical framework for develop social situations among competing players. In some respects, game theory is the science of strategy, or at least the optimal decision-making of independent and competing actors in a strategic setting.

Economists mostly use game theory to comprehend oligopoly firm behavior. It helps to predict likely outcomes when firms engage in certain behaviors, such as price-fixing and collusion.