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 a Nash equilibrium?
A. Management requests $35 and the labor union accepts $10.
B. Management requests $25 and the labor union accepts $10.
C. Management requests $50 and the labor union accepts $0.
D. Management requests $20 and the labor union accepts $20.
Answer: C
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The government of Richland has set a minimum wage for factory workers. This will lead to an ________ if above the current market wage
A) increase in total surplus B) increase in the number of workers supplied C) excess demand for workers D) increase in income inequality
Explain the Law of Demand
What will be an ideal response?
Monetary policy will have a large income effect provided the
A) IS curve is flat. B) LM curve is steep. C) IS curve is steep. D) LM curve is flat.
The imposition of a binding price ceiling on a market causes quantity demanded to be a. greater than quantity supplied. b. less than quantity supplied
c. equal to quantity supplied. d. Both (a) and (b) are possible.