A long-lived cartel maximizes its joint profits by restricting production to push up prices. Firm A cheats by temporarily raising its production. Which response by Firm B illustrates a tit-for-tat game?
a. Firm B temporarily raises its prices.
b. Firm B temporarily raises its production.
c. Firm B permanently lowers its production.
d. Firm B permanently lowers its prices.
b. Firm B temporarily raises its production.
You might also like to view...
Should the Fed only have the single goal of price stability? Why or why not?
What will be an ideal response?
Refer to the figure above, which shows domestic supply and demand. If P1 is equal to P2 (the world price) plus a tariff, then the social loss from the tariff is equal to
A) a + c B) b C) P1 ( Q3 - Q2 ) D) P2 [(Q2 - Q1 ) + (Q4 - Q3 )] E) a + b + c
There is a flexible exchange rate system and only two countries in the world, the United States and Mexico. An increase in income growth in Mexico relative to income growth in the United States will cause the
A) dollar to appreciate. B) peso to depreciate. C) dollar to depreciate. D) a and b E) There is not enough information to answer the question.
A purely competitive wheat farmer can sell any wheat he grows for $25 per bushel. His five acres of land show diminishing returns because some are better suited for wheat production than others. The first acre can produce 1,000 bushels of wheat, the second acre 900, the third 800, and so on.
a. Use the table below to answer the following questions. How many bushels will each of the farmer’s five acres produce? How much revenue will each acre generate? What are the TR and MR for each acre?
Instructions: Enter your answers as whole numbers.
b. If the marginal cost of planting and harvesting an acre is $20,000 per acre for each of the five acres, how many acres should the farmer plant and harvest? acres.