Refer to the information provided in Table 14.3 below to answer the question that follows.
Table 14.3B's Strategy
?AdvertiseDon't Advertise??A's profit $75 millionA's profit $200 million?AdvertiseB's profit $75 millionB's profit $50 millionA's Strategy????Don'tA's profit $50 millionA's profit $100 million?AdvertiseB's profit $200 millionB's profit $100 millionRefer to Table 14.3. If both firms follow a maximin strategy, the equilibrium in the game is
A. (Advertise, Don't Advertise).
B. (Advertise, Advertise).
C. (Don't Advertise, Advertise).
D. (Don't Advertise, Don't Advertise).
Answer: B
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If the single-input producer choice set is fully convex, the first order conditions of the profit maximization problem are necessary but not sufficient for identifying the profit maximizing production plan.
Answer the following statement true (T) or false (F)
The difference between absolute and comparative advantage is that:
a. absolute advantage refers to input cost, while comparative advantage refers to opportunity cost. b. absolute advantage refers to opportunity cost, while comparative advantage refers to input cost. c. absolute advantage is applicable only to individuals, and comparative advantage is applicable only to countries. d. absolute advantage is applicable only to countries, and comparative advantage is applicable only to individuals. e. absolute advantage is applicable to international trade, while comparative advantage applies to exchange of goods in the domestic market.
Innovation is the application of new technology to a production process
Indicate whether the statement is true or false
Natural resources
a. are inputs provided by nature. b. include land, rivers, and mineral deposits. c. take two forms: renewable and nonrenewable. d. All of the above are correct.