Capital income includes:
A. capital gains from stock sales.
B. profits, rent, and interest.
C. wages and salaries.
D. earnings of the self-employed.
Answer: B
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The equilibrium outcome used in both the sequential and simultaneous move games is known as
a. The centrality equilibrium b. First mover equilibrium c. Nash equilibrium d. All of the above
Game theory is:
A. the study of how people behave strategically under different circumstances. B. used to evaluate the microeconomic choices that involve probabilities of different outcomes. C. used to predict the winners of only certain types of strategic games. D. the study of games of chance like solitaire or betting on horse races.
Which of the following statements is correct?
A. Total utility is the change in marginal utility as quantity consumed increases. B. Marginal utility is the sum of total utility. C. Total utility is the product of multiplying price times marginal utility. D. Total utility is the sum of marginal utilities.
There are two existing firms in the market for computer chips. Firm A knows how to reduce the production costs for the chip and is considering whether to adopt the innovation or not. Innovation incurs a fixed setup cost of C, while increasing the revenue. However, once the new technology is adopted, another firm, B, can adopt it with a smaller setup cost of C/2. If A innovates and B does not, A earns $20 in revenue while B earns $0. If A innovates and B does likewise, both firms earn $15 in revenue. If neither firm innovates, both earn $5. Under what condition will firm A innovate?
A. C < 30 B. 35 > C > 25 C. 10 > C > 0 D. C > 30