Refer to the normal-form game of advertising shown below.Firm AFirm B??AdvertiseDo Not Advertise?Advertise$0,$0$175,$10?Do Not Advertise$10,$175$125,$125Suppose there is a 20 percent chance that the advertising game depicted in Figure 10-17 will end next period. The collusive agreement {(not advertise, not advertise)} is:
A. unsustainable since $10 > $50.
B. sustainable since $10 > $50.
C. sustainable since $175 < $625.
D. unsustainable since $175 < $625.
Answer: C
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If the United States can increase its production of automobiles without decreasing its production of any other good, the United States must have been producing at a point
A) within its PPF. B) on its PPF. C) beyond its PPF. D) None of the above is correct because increasing the production of one good without decreasing the production of another good is impossible.
Today's U.S. dollar bills are "backed" by
A) nothing. B) Warren Buffet. C) barrels of oil. D) precious metals. E) U.S. Treasury Bonds.
In the above figure, if output were restricted to 300 million pounds of turkey, then
A) the marginal social benefit would exceed the marginal social cost on the last pound of turkey traded by $0.80. B) there would be a deadweight loss of $40 million. C) there would be inefficient underproduction of turkey. D) All of the above answers are correct.
For something to satisfy the medium-of-exchange function of money, it must be
A) backed by gold. B) readily exchangeable for other goods. C) issued by a central bank. D) an inherently valuable commodity.