Profit is the factor price for ________
A) capital
B) land
C) entrepreneurship
D) labor
C
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Fuji and Kodak produce identical film. The market demand for film is given by P = 8 - Q, where P is the price (in dollars per roll of film) and Q is the quantity (in hundreds of rolls). Each firm has the option of producing 150, 200, or 300 rolls of film at a constant marginal cost of $2 per roll with no fixed costs. The firms' possible profits for various outcomes are summarized in the accompanying table.
(i) If the two firms behave competitively, what will be the outcome of this game? Is this outcome Pareto optimal for the firms?
(ii) If the two firms merge and form a monopoly, what will be the outcome of this game? Is this outcome Pareto optimal for the firms?
(iii) What is the Nash equilibrium for this game? Is it Pareto optimal for the firms? How does it compare with the competitive and monopoly outcomes?
(iv) Suppose this game is played sequentially, with Fuji as the first player. What will be the Stackelberg equilibrium? Is it Pareto optimal?
An increase in our federal government's budget deficit will likely:
a. increase the national debt. b. increase interest rates. c. be less effective in stimulating the economy than the spending multiplier implies because of crowding out. d. decrease borrowing by households and businesses. e. All of the answers are correct.
Which of the following is NOT an artificial barrier to entry?
A. a patent B. government franchise C. large economies of scale D. government licensing
Use the information provided in Table 7.2 below to answer the question(s) that follow.
Table 7.2Inputs Required to Produce a Product Using Alternative Technologies
Refer to Table 7.2. If the hourly wage rate is $10 and the hourly price of capital is $50, which production technology should be selected?
A. A B. B C. C D. D