In a subgame-perfect equilibrium
A) each player's strategy constitutes a Nash equilibrium at every subgame of the original game.
B) the last mover has an advantage over other players.
C) the first mover has an advantage over other players.
D) each player has the same response as the others at every subgame of the tree.
A
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Suppose that last year you borrowed $100 at 5 percent interest to purchase a $100 pair of Nike cross-training shoes. This year you repaid the bank with interest. If the inflation rate was 10 percent last year, your purchase of the shoes would:
a. make you an inflation winner as you saved $5 on the shoes. b. make you an inflation loser as you paid $5 more than you should have for the shoes. c. not be affected at all by the inflation rate. d. be taxed according to COLA adjustments. e. make you an inflation loser because of bracket creep.
Figure 10-16
Suppose an economy is currently operating at output Y1 associated with AD1 and SRAS1, shown in . Initially, the output of this economy is
a.
above its potential, and the rate of unemployment is greater than the natural rate.
b.
below its potential, and the rate of unemployment is greater than the natural rate.
c.
above its potential, and the rate of unemployment is less than the natural rate.
d.
below its potential, and the rate of unemployment is less than the natural rate.
Answer the question on the basis of the following information: Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage
rate, the shop can now provide a total of 42 haircuts per day. Refer to the given information. Harry should: A. hire the second barber because he will add $28 to profits. B. hire the second barber because he will add $108 to profits. C. not hire the second barber because he is less productive than the first barber. D. not hire the second barber because he will diminish profits.
Related to the Economics in Practice on page 67: Consumption of quinoa has been on the rise. A grain called teff has been referred to as quinoa's twin and is often consumed in place of quinoa. This would make teff and quinoa ________, and an increase in the price of quinoa should ________ the demand for teff, ceteris paribus.
A. complements; decrease B. substitutes; increase C. complements; increase D. substitutes; decrease