Management and a labor union are bargaining over how much of a $50 surplus to give to the union. The $50 is divisible up to one cent. The players have one shot to reach an agreement. Management has the ability to announce what it wants first, and then the labor union can accept or reject the offer. Both players get zero if the total amounts asked for exceed $50. Which of the following is true?
A. ($25, $25) is a Nash equilibrium.
B. There are multiple Nash equilibria.
C. There are multiple Nash equilibria, and ($25, $25) is a Nash equilibrium.
D. A Nash equilibrium is also a perfect equilibrium.
Answer: C
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Referring to a production possibilities curve and the goods being compared, depict the economic event. Millions of immigrants came to the United States in the second half of the 19th century to work on the transcontinental railroad (capital goods vs. consumer goods).
A. A movement from a point inside the curve to a point on or near the curve B. A movement from a point on or near the curve to a point inside the curve C. A shift in the entire curve to the right (outward) D. A shift in the entire curve to the left (inward)
The federal agency established in 1934 to regulate telephones and broadcasting industries is the:
a. Interstate Commerce Commission (ICC). b. Federal Trade Commission (FTC). c. Securities and Exchange Commission (SEC). d. Equal Employment Opportunity Commission (EEOC). e. Federal Communications Commission (FCC).
Exhibit 14A-1 Aggregate demand and supply model
Given the shift of the aggregate demand curve from AD1 to AD2 in Exhibit 10A-1, the real GDP and price level (CPI) in long-run equilibrium will be:
A. $8 billion and 150. B. $12 billion and 200. C. $8 billion and 250. D. $8 billion and 200.
Suppose that the percentage change in demand is 20%, the price elasticity of supply is 2, and the percentage change in the equilibrium price is 4%. What is the price elasticity of demand?
A. 0 B. 1 C. 2 D. 3