00:01
In this problem, we have a situation sort of like game theory where all the firms in industry come together to form a cartel and they will limit their production in order to raise the prices.
00:14
And so we can compare firm a's decisions to all other firm's decisions to see which outcome would most increase firm a's benefit from existence of the cartel.
00:27
And so we can plug all of the options into this box or grid in which firm a can restrict or cheat and other firms can restrict output or cheat.
00:40
So option a says every firm, a included, do cooperate and restrict output.
00:47
Well, that would match up to this box here because everyone is restricting output.
00:53
In option b, only firm a restricts while the others cheat.
00:57
So again, firm a is restricting, but other firms are cheating.
01:03
Option c says all firms cooperate and restrict, but firm a will cheat.
01:10
It will not cooperate.
01:13
And so that can be put here, where a cheats, others cooperate.
01:18
And finally, option d, where there's no restriction.
01:22
Basically, all firms are cheating.
01:26
And this is also similar to option e, where all forms are cheating...
