Given the payoffs in the matrix shown, Firm B:
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.
A. should always choose to collude, regardless of Firm A's actions.
B. should always choose to compete, regardless of Firm A's actions.
C. should compete if Firm A competes and collude if Firm A colludes.
D. should compete if Firm A colludes and collude if Firm A competes.
B. should always choose to compete, regardless of Firm A's actions.
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Which of the following best explains why the monopolist's marginal revenue is less than the sales price?
a. To sell more units, the monopolist must reduce price on all units sold. b. As the monopolist expands output, the average total cost will decline. c. The monopolist charges each consumer the highest possible price. d. When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist.
Keynesians would recommend
A. Lower government expenditures when there is a shortfall in aggregate demand. B. Lower taxes when there is excess aggregate demand. C. Higher taxes when there is excess aggregate demand. D. Reliance on the market rather than the government for adjustment when an undesirable level of aggregate demand occurs.
The costs borne by an individual victim of theft can diverge from the social costs if the
A. stolen items were destroyed by the thief. B. stolen items were priceless. C. stolen items were recovered for the victim by the police. D. all of the options are correct.
Suppose real estate prices rise by 40 percent in a four-year period, while goods and services rise in price by 8 percent in the same time period. Population, the stock of houses, and other variables important to real estate prices have remained almost constant. Which of the following is most likely?
A. GDP has increased by about 40 percent over the four-year period. B. Nominal wealth has declined. C. Real wealth has increased. D. Asset inflation has occurred.