What is a prisoner's dilemma?
A) a game that involves no dominant strategies
B) a game in which prisoners are stumped because they cannot communicate with each other
C) a game in which players act in rational, self-interested ways that leave everyone worse off
D) a game in which players collude to outfox authorities
Answer: C
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Goldie is indifferent between option A, which gives her $9,000 for sure, and option B, which gives her $3,000 with probability 1/3 or $18,000 with probability 2/3. Goldie's cost of risk for option B is
A) zero. B) $1,000. C) $3,000. D) $4,000.
An improvement in technology
a. will always result in a parallel shift of the production possibilities frontier b. will never result in a parallel shift of the production possibilities frontier c. will be indicated as a movement along the production possibilities frontier d. will shift the production possibilities frontier outward but not necessarily to a parallel position e. may not shift the production possibilities frontier
Fluctuations around the long-run aggregate supply curve are:
A. called the business cycle. B. experienced as expansions, recessions, and recoveries. C. normal for an economy. D. All of these are true.
In the classical model, markets clear
a. in the short run b. every month c. immediately d. in the long run e. as soon as any shock occurs