Refer to Figure 4.9. Payoffs for playing Solid and Dash are indicated by the appropriate lines in the figure. Answer the following questions based on the above figure:
a. If you were playing this game, what would you choose if you thought everyone was playing Solid?
b. If you were playing this game, what would you choose if you thought everyone was playing Dash?
c. What is the dominant strategy in this game?
d. What is the equilibrium outcome in this game?
a. Solid
b. Solid
c. The dominant strategy is for everyone to play Solid.
c. Equilibrium occurs where everyone plays Solid.
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Fixing up old houses requires plumbing and carpentry. Jack (who is a jack of all trades but is a master of none) is a decent carpenter and a decent plumber, but is not particularly good at either
He can fix up two houses in a year if he does all of the carpentry and plumbing himself. His wage is $50,000 per year. a. What is Jack's average total cost of fixing up two old houses? b. George is an excellent plumber and Harriet is an excellent carpenter. George can do all of the plumbing and Harriet can do all of the carpentry to fix up five houses per year. Each earns a wage of $50,000 per year. If George and Harriet work together and fix up five old houses each year, what is their average cost? c. What does this problem tell you about one of the sources of economies of scale?
The costs of inflation to firms due to reprinting price lists are known as
A) seigniorage. B) menu costs. C) velocity costs. D) shoe-leather costs.
An analysis of production possibilities curves indicates that the reason why underdeveloped nations have difficulties increasing their economic growth rates is because:
a. low population growth rates mean fewer workers to produce food and other necessities. b. their production possibilities curves shift in when resources are increased. c. their production possibilities curves are positively sloped, unlike those in more developed economies. d. they must cut back their already meager consumption levels to increase capital production. e. the opportunity cost of shifting resources from consumption goods to capital goods is relatively low.
Economists usually suggest that the best way to examine the deficit is by expressing it:
A. as a percentage of GDP. B. in real terms. C. in nominal terms. D. None of these is true.