Figure 4-21
Which price in Figure 4-21 is equilibrium?
a.
P1
b.
P2
c.
P3
b
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The demand for loanable funds curve slopes downward because the
A) expected rate of profit is related positively to the real interest rate. B) real interest rate is the opportunity cost of investment. C) price of bonds and stocks is not related to the real interest rate. D) higher the real interest rate, the lower the cost of investment. E) expected rate of profit is factor that "rewards" firms for their investment.
The economy's marginal social benefit curve for a public good is equal to the ________
A) horizontal sum of the individual demand curves B) vertical sum of the individual marginal benefit curves C) horizontal sum of the individual marginal benefit curves D) vertical sum of the individual supply curves
A town wants to build a new bridge. Construction firms will submit sealed bids
The town will award the contract to the firm that submits the lowest bid and will pay the firm the amount of the second lowest bid (that is, the town will conduct a second-price procurement auction). So, for example, if Firm A bids $8 million, Firm B bids $9 million, and Firm C bids $10 million then the city will award the contract to Firm A (it submitted the lowest bid) and pay Firm A $9 million (the amount of the second lowest bid). Suppose your firm is willing to build the bridge for a minimum of $9 million. a. Show that bidding $9 million is a better strategy than bidding some amount below $9 million— say, $7 million. b. Show that bidding $9 million is a better strategy than bidding some amount above $9 million—say, $11 million.
In a game of bargaining, those who _______________ will likely get the highest payoff.
A. are patient B. are cooperative C. have a commitment strategy D. collude