A commitment problem exists when people cannot achieve their goals because:
A. the payoff matrix is unknown.
B. they cannot make credible threats or promises.
C. they cannot play their dominant strategy.
D. they do not have the first-mover advantage in a sequential move game.
Answer: B
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Use the following table to answer the question below. Jake's Production Possibilities ScheduleJane's Production Possibilities SchedulePounds of Green BeansPounds of CornPounds of Green BeansPounds of Corn01600801012020602080404030406020400800Without trade Jake consumes 20 pounds of green beans and 80 pounds of corn, and Jane consumes 40 pounds of green beans and 40 pounds of corn. If the terms of trade are 1 pound of green beans for 3 pounds of corn, and Jake sells Jane 72 pounds of corn, then the gains from trade for Jane are ________ pounds of green beans and ________ pounds of corn with trade and specialization.
A. 32, 16 B. 8, 4 C. 16, 32 D. 4, 8
Refer to the above figure. An increase in aggregate demand between real Gross Domestic Product (GDP) levels Y0 and Y1
A) would not increase output since the economy is already working at full capacity. B) would have no effect on the price level. C) would cause price levels to fall. D) would most likely result in some inflation.
In the economic way of thinking, bald eagles are a scarce good. Thus,
A) the bald eagle population can be maintained at no cost. B) the bald eagle population should be maintained at any cost. C) there are substitutes for bald eagles. D) there are no substitutes for bald eagles. E) economists don't like bald eagles.
Fear of a major recession causes stock prices to fall, everything else held constant, which in turn causes consumer spending to
A) increase. B) remain unchanged. C) decrease. D) cannot be determined.