Exhibit 10-6 Two-Firm Payoff Matrix
Suppose costs are identical for the two firms in Exhibit 10-6. Each firm assumes without formal agreement that if it sets the high price its rival will not charge a lower price. Under these "tit-for-tat" conditions, equilibrium will be established by:
A. Widget Co. charging the high price and Ajax Co. charging the low price.
B. Widget Co. charging the high price and Ajax Co. charging the high price.
C. Widget Co. charging the low price and Ajax Co. charging the low price.
D. Widget Co. charging the low price and Ajax Co. charging the high price.
Answer: B
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Suppose there are three power-generating plants, each of which has access to 5 different production processes. The table below summarizes the cost of each production process and the corresponding number of tons of smoke emitted each. Process(smoke/day) A(4 tons/day) B(3 tons/day) C(2 tons/day) D(1 ton/day) E(0 tons/day) Cost to Firm X ($/day) $500$514$530$555$585 Cost to Firm Y ($/day) $400$420$445$480 $520Cost to Firm z ($/day) $300$325$360$400 $550It would cost Firm X ________ to reduce emissions by one ton if it currently emits 3 tons, and ________ to reduce emissions by one ton if it currently emits 2 tons.
A. $14; $25 B. $14; $16 C. $30; $55 D. $16; $25
Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one ticket falls from $25 to $10
A) consumer surplus decreases from $24 to $12. B) consumer surplus increases from $0 to $31. C) only three tickets will be sold. D) everyone will buy a ticket.
Refer to Table 9-9
a. Which country has an absolute advantage in the production of both light bulbs and flash drives? b. Which country has a comparative advantage in the production of light bulbs? c. Which country has a comparative advantage in the production of flash drives? Table 9-10 Pens Pencils Tran 40 160 Farah 50 150 Table 9-10 shows the output per week for pens and pencils by Tran and Farah.
Assume a simple economy without a government and that saving and borrowing behavior is never observed. Then the value of
A) production is equal to income. B) expenditures is less than the value of production. C) production is less than the value of expenditures. D) production is less than income.