Backward induction is a useful tool for:
A. finding an optimal strategy in a sequential game.
B. finding an optimal strategy in a simultaneous game.
C. analyzing the decisions in a prisoner's dilemma-type game.
D. Backward induction is useful in any of these games.
Answer: A
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Suppose that in 2011, 4 million plasma TVs were purchased at $950 each, while in 2012, 3 million plasma TVs were purchased at $800 each. What might have caused this change?
A) The price of LCD TVs (a substitute for plasma TVs) fell. B) The price of LCD TVs (a substitute for plasma TVs) rose. C) Plasma TV manufacturing technology decreased. D) Plasma TV manufacturing technology increased.
Total economic profit is
A) total revenue minus total opportunity cost. B) total revenue divided by total cost. C) marginal revenue minus marginal cost. D) marginal revenue divided by marginal cost.
If significant economies of scale are present, large firms will be much more efficient producers than small firms.
Answer the following statement true (T) or false (F)
Figure 7-7
In Figure 7-7 at 100 units, AFC equals
A. 10. B. 100. C. 180. D. 1,000.