Consider a game in which all outcomes give the players the same total payoff. Explain why every outcome in such a game will be Pareto optimal.
What will be an ideal response?
Consider an outcome in the game described, and suppose a change is made that increases one player's payoff. Then the other player's payoff must fall, because the total payoff to the players is constant. Since we can never make one player better off without simultaneously making the other player worse off, all outcomes must be Pareto optimal.
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When a firm buys a product from another firm in the same company, it is charged
A) an implicit price. B) a market price. C) a predatory price. D) a transfer price.
An increase in the price level in Japan relative to the price level in the United States would
a. increase U.S. net exports and increase aggregate demand. b. increase U.S. net exports and increase aggregate supply. c. reduce U.S. net exports and reduce aggregate demand. d. reduce U.S. net exports and increase aggregate demand.
If firms in a competitive price-searcher market are currently experiencing economic profits, then over time,
a. new firms will enter the market, and the current firms will experience a decrease in demand for their products until zero economic profit is again restored. b. new firms will enter the market, and the current firms will experience an increase in demand for their products until zero economic profit is again restored. c. some existing firms will exit the market, and the remaining firms will experience an increase in demand for their products until zero economic profit is again restored. d. some existing firms will exit the market, and the remaining firms will experience a decrease in demand for their products until zero economic profit is again restored.
In less than two years in the early 1920s, the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks. This is a spectacular example of
a. market power caused by a change in the country's standard of living. b. market power caused by a single firm controlling the newspaper production. c. inflation caused by increased productivity in the economy. d. inflation caused by an increase in the quantity of money in the economy.