The figure below shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, which one of the following statements is TRUE?
A. The outcome of the game is unpredictable
B. Neither firm entering is a Nash equilibrium
C. Firm A does not have a dominant strategy
D. Firm B does not have a dominant strategy
Answer: D. Firm B does not have a dominant strategy
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Assume it is announced that a large number of new competitors have entered the market for mountain bikes, each offering a different model. Based on this information, this industry is best characterized as:
A) perfectly competitive. B) a monopoly. C) monopolistically competitive. D) an oligopoly.
Economist Douglass North suggests that the term used to describe government bodies, development agencies, and international groups should be:
A. organizations. B. institutions. C. agencies. D. groups.
Which of the following is the best definition of openness?
a. The average of imports expressed as a share of GDP. b. The average of goods traded in markets expressed as a share of GDP. c. The average of imports and exports expressed as a share of GDP. d. The average trade balance expressed as a share of GDP. e. The average of exports expressed as a share of GDP.
If a perfectly competitive firm can sell each unit of output for $9, and the marginal cost of the last unit produced is $8.50, then the:
A. firm should lower its output level in order to increase profits. B. firm is earning an average profit of $0.50. C. extra benefit of the last unit produced is greater than the extra cost. D. extra benefit of the last unit produced is less than the extra cost.