Refer to Table 14-2. Is the current strategy in which each firm charges the low price and earns a profit of $7,000 a Nash equilibrium? If not, why and what is the Nash equilibrium?
A) No, it is not a Nash equilibrium because each firm can do better by charging the high price. The Nash equilibrium occurs when each firm charges the high price and earns a profit of $10,000.
B) No, the current situation is not a Nash equilibrium. The Nash equilibrium for each firm is to have the other charge a high price and for the firm in question charge a low price.
C) Yes, the current situation is a Nash equilibrium.
D) No, the current situation is not a Nash equilibrium; it is a dominant strategy equilibrium. There is no Nash equilibrium in this game.
C
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Which of the following observations is true?
A. TFC remains the same irrespective of units of output produced. B. TVC remains the same irrespective of units of output produced. C. TVC falls as the unit of output increases. D. AFC increases as output increases further and further.
The money value of all trading activity (Q) at market prices (P) is called Gross Domestic Product for a given year
Indicate whether the statement is true or false
Assume that an increase in a household's disposable income from $40,000 to $48,000 leads to an increase in consumption from $35,000 to $41,000. This means that the household's
A. marginal propensity to save is 0.20. B. marginal propensity to consume is 0.6. C. average propensity to consume is 0.75. D. marginal propensity to consume is 0.75.
In the long run, what effect does a government's deficit spending have on equilibrium real Gross Domestic Product (GDP)?
A. Higher government deficits will not raise equilibrium Gross Domestic Product (GDP) above the full-employment level. B. Deficit spending will decrease the nation's equilibrium real Gross Domestic Product (GDP). C. Equilibrium real Gross Domestic Product (GDP) will increase beyond the full-employment level and there will also be an inflationary effect. D. The government's deficit spending will increase equilibrium real Gross Domestic Product (GDP).