Game theory is used to explain the pricing behavior of
A) monopolies.
B) perfect competition.
C) monopolistic competition.
D) oligopolies.

Question

Quizplus · Accepted Answer

Game theory, which analyzes the strategic interactions between firms, is most applicable to oligopolistic markets, where a small number of firms dominate the market and can affect each other's profits through their pricing decisions. In contrast, perfect competition involves many small firms who do not have the ability to affect the market price, while monopolies and monopolistic competition involve firms with varying degrees of market power but do not involve strategic interactions in the same manner as oligopolies.

Game Theory Is Used to Explain the Pricing Behavior of