Refer to Figure 12.7. If Barney got to move first instead of Fred, the path of the game would be:
A. Barney stays out and Fred chooses a large quantity.
B. Barney enters and Fred chooses a large quantity.
C. Barney stays out and Fred chooses a small quantity.
D. Barney enters and Fred chooses a small quantity.
Answer: D
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The assumption that individuals act rationally implies that
a. people think only of themselves and disregard the well-being of others b. people undertake all those activities that yield benefits to themselves c. people only consider the costs of an activity to decide whether it is worthwhile d. the greater the cost of a charitable deed to a benefactor, the more likely he or she is to perform that deed e. people implicitly calculate the costs and benefits of an activity to decide if it is worthwhile
Establishing a state employment agency that speeds up the process of matching unemployed workers with unfilled jobs is an attempt to lower
A) unnatural unemployment.
B) seasonal unemployment.
C) cyclical unemployment.
D) frictional unemployment.
E) structural unemployment.
In the case of Interstate Bakeries and Continental Bakery, the Justice Department concluded that:
A. the merger of two firms selling close substitutes may lead to higher prices. B. Interstate Bakeries attempted to drive out Continental by using predatory pricing. C. a merger between the two companies would save money in production costs, and so would be good for consumers. D. Continental attempted to drive out Interstate Bakeries by using predatory pricing.
Refer to the game theory matrix where the numerical data show the profits resulting from alternative combinations of advertising strategies for Ajax and Acme. Ajax's profits are shown in the upper right part of each cell; Acme's profits are shown in the lower left. Without collusion, the outcome of the game:
A. maximizes joint profits for the firms.
B. results in a prisoner's dilemma.
C. results in greater economic efficiency.
D. forces one or more firms out of the industry.