In a perfectly competitive market, if supply and demand fully reflect all of the costs and benefits associated with production and consumption, then total economic surplus is maximized when:
A. the market is in equilibrium.
B. consumer surplus is greater than producer surplus.
C. consumer surplus and producer surplus are equal.
D. price controls keep prices low enough that most consumers can purchase the item.
Answer: A
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Intel and AMD are a duopoly that produces CPU chips. Intel and AMD can conduct R&D or they cannot conduct R&D. The table above shows the payoff matrix for the two firms. The numbers are millions of dollars of profit
The Nash equilibrium is for Intel to ________ and for AMD to ________. A) conduct R&D; conduct R&D B) conduct R&D; not conduct R&D C) not conduct R&D; conduct R&D D) not conduct R&D; not conduct R&D E) conduct R&D; either conduct R&D or not conduct R&D, the equilibrium could be either choice for AMD
What are the preconditions for labor productivity growth?
What will be an ideal response?
An appreciation of the Norwegian kroner in relation to the U.S. dollar is most likely to cause:
a. an increase in the U.S. demand for Norwegian goods. b. an increase in the Norwegian demand for U.S. goods. c. an increase in the supply of U.S. goods to Norway. d. a decrease in the supply of Norwegian goods to the United States. e. no change in the demand or supply of goods for either country.
The second step of the four step process is to
a. identify the new equilibrium and then compare the original equilibrium price and quantity to the new equilibrium price and quantity. b. decide whether the economic change being analyzed affects demand or supply. c. draw a demand and supply model before the economic change took place. d. decide whether the effect on demand or supply causes the curve to shift to the right or to the left, and sketch the new demand or supply curve on the diagram.