In the long run, both monopolistically competitive and perfectly competitive firms attain
A) lowest cost production.
B) positive economic profits.
C) zero economic profits.
D) productive efficiency.
Answer: C
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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.
Fundamentally, to reap the benefits of specialization, an economy must
A) be heavily industrial. B) be heavily agricultural. C) have an extensive system of higher education. D) develop ways for individuals to trade goods with one another.
A defendant believes there is a 70 percent chance that the plaintiff will win $800,000 and a 30 percent chance that the plaintiff will lose and be awarded nothing (zero). The plaintiff believes that there is a 90 percent chance that they will win $800,000 and a 10 percent chance that they will be awarded nothing (zero). The plaintiff's litigation cost is $300,000 and the defendant's litigation
cost is $200,000. What is the defendant's expected loss from the litigation? A) $550,000 B) $660,000 C) $420,000 D) $760,000
Two goods, X and Y, are complementary goods if the demand for X:
a. increases when the price of Y increases. b. increases when income increases. c. decreases when the price of Y increases. d. increases as the price of its substitute good increases. e. decreases as the price of its substitute good decreases.