Answer the following statements true (T) or false (F)
1) When each firm uses the strategy that maximizes its profit, it is possible for the equilibrium result to yield the worst possible joint equilibrium for all firms.
2) If Best Lights and Bright Lights are competing in a duopoly, Best Lights' profit depends solely on the decisions of its managers.
3) Every dominant strategy equilibrium is a Nash equilibrium, but not every Nash equilibrium is a dominant strategy equilibrium.
4) Cheap talk helps firms cooperate and earn higher profit.
5) If two players are in a finitely repeated game and both players know the final period, cooperation is not possible due to the end-period problem.
1) TRUE
2) FALSE
3) TRUE
4) FALSE
5) TRUE
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If an economy is producing on its PPF, then it is definitely achieving
A) both production and allocative efficiency. B) only production efficiency, but it definitely is not achieving allocative efficiency. C) only allocative efficiency, but it is definitely not achieving production efficiency. D) neither production nor allocative efficiency. E) only production efficiency.
An important feature of a ________ is that the holder has the right, but not the obligation, to buy or sell currency
A) swap B) foreign exchange arbitrage C) foreign exchange option D) futures market contract
What would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?
A) Prescription medications will become an inferior good. B) There is an upward movement along the demand curve for prescription medications. C) There is a downward movement along the demand curve for prescription medications. D) The demand for prescription medications will decrease.
Which of the following is a driving force underlying economic growth?
a. trade restrictions that protect domestic businesses from competition with foreign producers b. regulations that require businesses to obtain permission from the government before starting a new business c. tax increases that expand the revenues of the government d. entrepreneurial discovery and production of improved products