If a person is risk averse, then she has negative marginal utility of wealth
Indicate whether the statement is true or false
False. The marginal utility of wealth is positive for the risk-averse person; however, marginal utility diminishes as wealth increases.
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The marginal benefit of pollution abatement
A) increases at an increasing rate as abatement increases. B) decreases as pollution abatement increases because of the law of diminishing marginal utility. C) increases as pollution abatement increases because of the law of increasing marginal returns. D) is constant as pollution abatement increases.
Quantitative evidence from Fishlow, Fogel and Mercer indicates that
a. antebellum railroads were built ahead of demand, but post-bellum transcontinentals were not. b. post-bellum transcontinentals were built ahead of demand, but antebellum railroads were not. c. both antebellum railroads and post-bellum railroads were built ahead of demand. d. antebellum railroads were not built ahead of demand, but the evidence on post-bellum railroads is mixed.
If a panic causes Indian depositors to withdraw their money from Japanese banks, it would cause the Japanese Yen to depreciate, since the supply of Yen has________
a. Not changed b. Decreased c. Increased d. None of the above
Figure 13-4
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The above matrix (Figure 13-4) displays the possible profit results of two firms, A and B, from following two different possible strategies: charging a high price and charging a low price. In each cell, the first number is the profit of firm A, and the second number is the profit of firm B.
a. Assume that collusion is not possible. Determine the optimal strategy for each firm. Explain why it is the best strategy to follow.
b. Based on your answer to a., explain why firms collude. What are the pitfalls of collusion?
What will be an ideal response?