Backward induction means a player:
A. studies the rules of the game to determine how to make his next move.
B. studies what other players have done in similar situations.
C. studies his opponent's moves to figure out what she did wrong.
D. works from the desired outcome to determine the decisions that lead to that outcome.
Answer: D
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Explain the reasons why the AD curve slopes downward
What will be an ideal response?
If the fixed costs are relatively large, a relatively good approximation to the correct transfer price is
a. average costs b. average fixed costs c. average variable costs d. the market price
The market supply curve of a resource is
a. downward sloping b. upward sloping c. horizontal at the market price d. vertical e. determined by firms
Understanding the distinction between positive and normative economic statements is important because it
a. enables us to derive better forecasts of macroeconomic aggregates such as GDP b. explains why economics is not a physical science c. is the primary distinction between macroeconomics and microeconomics d. provides a framework for understanding differences among economists e. enables us to see the rationale behind economic models