Answer the following statement(s) true (T) or false (F)
1. When a game has more than one Nash equilibrium, it is unlikely that a stable equilibrium will ever be reached.
2. The copycat game does not have a pure strategy Nash Equilibrium.
3. When mixed strategies are allowed, the Copycat Game does have a Nash equilibrium.
4. Nash equilibrium is a normative concept.
5. For an outcome to be Pareto optimal, the players' total payoff must be as large as possible.
1. False
2. True
3. True
4. False
5. False
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Efficiency is reached by allocating resources to those who have the greatest willingness to pay for them. This can be achieved in a market where a negative externality is present by:
A. taxing consumers. B. giving consumers a subsidy. C. place a quota at the efficient level. D. All of these will achieve efficiency.
The chemical industry has a Lerner index of 0.67. Based on this information, a firm with marginal cost of $10 should charge a price of:
A. $30.30. B. $14.93. C. $3.30. D. $6.70.
Refer to the graph below. An increase in price, other factors constant, would cause a change from:
A. Point 5 to point 1
B. Point 4 to point 5
C. Point 1 to point 6
D. Point 3 to point 4
Which of the following statements is FALSE regarding the definition of poverty?
A. Real incomes in the United States have been growing at a compounded annual rate of almost 2 percent per capita. B. A threshold income level is used to define poverty. C. Poverty cannot be defined in relative terms. D. Adjustments to the poverty level are made on the basis of changes in the Consumer Price Index.