If you advertise and your rival advertises, you each will earn $5 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $15 million and the non-advertising firm will earn $1 million. Suppose this game is repeated for a finite number of times, but the players do not know the exact date at which the game will end. The players can earn collusive profits as a Nash equilibrium to the repeated play of the game if the probability the game terminates in any period is:
A. 1.
B. close to zero.
C. greater than 1.
D. None of the answers is correct.
Answer: B
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An income tax _____
a. increases the return to bearing risk, if the company is a monopolist b. has no impact on the return to bearing risk c. increases the return to bearing risk d. reduces the return to bearing risk
Of the curves displayed in graph shown, what does curve C most likely represent?
A. Marginal cost
B. Average total cost
C. Average variable cost
D. Marginal revenue
What are the two basic principles of aggregation?
The foreign purchases effect suggests that a decrease in the American price level relative to those in other countries will
A. shift the aggregate demand curve leftward. B. shift the aggregate supply curve leftward. C. decrease American exports and increase American imports. D. increase American exports and decrease American imports.