Question

Economists use game theory to analyze oligopolies because
A. game theory is useful in understanding the actions of firms that are price takers.
B. game theory helps us to understand why interactions among firms are crucial in determining profitable business strategies.
C. real markets are too complicated to analyze without using games.
D. it is more enjoyable for economists and students to learn by playing games.

Answer 1

Answer:

B. game theory helps us to understand why interactions among firms are crucial in determining profitable business strategies. 

Explanation:

Game theory studies interactions between economic agents. Game theory helps interacting economic agents determine the most profitable business strategy.

Game theory is usually used in economics to study oligopolies. It helps oligopoly firms determine if collusion is the best strategy or not .