The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, how many pure Nash equilibria are there?
A) 0
B) 1
C) 2
D) It cannot be determined.
B
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Consider a firm that uses labor and capital to produce output x using a homothetic production technology that has increasing returns to scale when output lies between 0 and xA, constant returns to scale when output lies between xA, and xB, and decreasing returns to scale when output exceeds xB (where 0
What will be an ideal response?
Firms in perfectly competitive markets who wish to maximize profits should produce:
A. more as long as marginal cost is greater than marginal revenue. B. less as long as marginal cost is less than marginal revenue. C. at the level where marginal cost equals marginal revenue. D. All of these are true.
Suppose that a market is initially in equilibrium. Then the government imposes a price floor above the equilibrium price. Which of the following will occur in the absence of a black market?
a. The market will remain in equilibrium. b. The quantity sold will drop. c. The quantity demanded will increase. d. The quantity supplied will decrease. e. An excess demand will develop.