This prisoner's dilemma game shows the payoffs associated with two firms, A and B, in an oligopoly and their choices to either collude with one another or not.
According to the matrix shown, the outcome of the "game" will be:
A. both firms will collude and act like a joint monopolist.
B. Firm B will compete and Firm A will collude.
C. Firm A will compete and Firm B will collude.
D. both firms will compete.
Answer: D
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If at its current production level, a perfectly competitive firm's marginal revenue and long-run marginal cost are equal to $0.50 and its long-run average cost is $0.35, which of the following statements is true?
A) The firm should expect the market price of its product to fall. B) The firm should expect to earn positive economic profit indefinitely. C) The firm should expect the market price of its product to increase. D) The firm should expect the market supply curve to decrease.
The main point of the second theorem of welfare economics is that:
A) efficiency is more important than equity. B) efficiency may be achieved, but equity is not a feasible goal. C) any attempt to achieve an equitable outcome must occur off the contract curve. D) any equitable outcome can be achieved by reallocating the resources among the members of a society.
Use the above table. Assuming constant opportunity costs, a comparative advantage in producing beef is possessed by
A) neither Argentina or France. B) both Argentina and France. C) Argentina. D) France.
"The typical age-earning cycle provides evidence of economic discrimination by age." Do you agree or disagree? Why?
What will be an ideal response?