Consider the following innovation game: Firm A must decide whether or not to introduce a new product. Firm B must decide whether or not to clone firm A's product. If firm A introduces and B clones, then firm A earns $1 and B earns $10. If A introduces and B does not clone, then A earns $10 and B earns $2. If firm A does not introduce, both firms earn profits of 0. How many Nash equilibria are there for this game?
A. 2
B. 0, but there are secure strategies.
C. 1
D. 0
Answer: C
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If the financial innovations such as ATM machines make money demand less elastic than it was before, then
a. the LM curve will become steeper. b. the LM curve will become flatter. c. both the IS and LM curves will become flatter. d. the LM curve will shift to the left.
Sweet Husks is a perfectly competitive corn farm. Currently, the expected price of an ear of corn is $0.30 and, at its current production level, Sweet Husks has a marginal cost of $.40 per ear. Which of the following statements is true?
A) Because the expected profit from an additional ear of corn is $0.10, Sweet Husks should decrease production to maximize its expected profit. B) Because the expected profit from an additional ear of corn is -$0.10, Sweet Husks should decrease production to maximize its expected profit. C) Because the expected profit from an additional ear of corn is $0.70, Sweet Husks should increase production to maximize its expected profit. D) Because the expected profit from an additional ear of corn is $0.10, Sweet Husks should increase production to maximize its expected profit.
The only way by which government can affect aggregate demand is through changes in its own purchases
a. True b. False Indicate whether the statement is true or false
According to Scenario 4-1, country C has net exports of:
a. zero. b. $13 million. c. $6 million. d. ?$13 million. e. ?$6 million.