Distinguish a direct and an inverse or negative relationship. Provide an example of each type of relationship
A direct relationship between two variables means an increase in the value of the independent variable will cause an increase in the value of the dependent variable; and vice versa. An example would be the relationship between the selling price of a good and the amount of the good put up for sale by producers. An inverse relationship between two variables means an increase in the value of the independent variable will cause a decrease in the value of the dependent variable; and vice versa. An example would be the relationship between the price of a good and the amount purchased.
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In many cities, the market for cab services is monopolized. This monopoly arises because:
a. of economies of scale. b. of government restrictions on the entry of new firms. c. there is a limited space on the streets for taxis. d. it protects the consumers from unscrupulous drivers. e. of high fixed costs of entering the business.
If the price of milk rises, when is the price elasticity of demand likely to be the lowest?
a. immediately after the price increase b. one month after the price increase c. three months after the price increase d. one year after the price increase
Answer the next question based on the following payoff matrix for a duopoly. The numbers indicate the profit in thousands of dollars for a high-price or a low-price strategy. Firm X? High PriceLow PriceFirm YHigh priceX = $625X = $725??Y = $625Y = $475?Low priceX = $475X = $400??Y = $725Y = $400Refer to the above payoff matrix. If both firms operate independently and do not collude, the most likely profit is:
A. $725,000 for firm X and $475,000 for firm Y. B. $400,000 for firm X and $400,000 for firm Y. C. $625,000 for firm X and $625,000 for firm Y. D. $475,000 for firm X and $725,000 for firm Y.
Pair-wise majority voting eliminates which problem?
A. Third party problem B. Majority options problem C. Misalignment problem D. Swing-vote problem