You have read that the free rider problem affects equilibrium in a public good context. Explain how this situation can be modeled as a prisoner's dilemma game.
What will be an ideal response?
Each individual will say before construction that he will tell the truth about his preferences. It
would be in each person's interest to lie about his true preferences, which would allow him to enjoy a higher level of public good without paying for it completely.
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Oil refiners can refine a barrel of petroleum so that it yields either more home heating oil or more diesel fuel. If the price of diesel fuel falls, there is
A) an increase in the supply of home heating oil. B) a decrease in the supply of home heating oil. C) an increase in the quantity of home heating oil supplied. D) a decrease in the quantity of home heating oil supplied. E) an increase in the demand for home heating oil.
Comparative advantage means the ability to produce a good or service
A) at a higher profit level than any other producer. B) at a lower selling price than any other producer. C) of a higher quality than any other producer. D) at a lower opportunity cost than any other producer.
Refer to Figure 14.3. To maximize the number of workers hired, the labor union will agree to wage rate:
A) W0. B) W1. C) W2. D) W3. E) none of the above
If the personal savings rate rose to 10%
A. our current account deficit would probably fall. B. our current account deficit would probably rise. C. our current account deficit would be unaffected.