The efficient markets hypothesis suggests that if an unexploited profit opportunity arises in an efficient market
A) it will tend to go unnoticed for some time.
B) it will be quickly eliminated.
C) financial analysts are your best source of this information.
D) all profits will be eliminated through taxation.
B
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The above figure shows the payoff matrix for two firms, A and B, choosing to produce a basic computer or an advanced computer. The mixed-strategy Nash equilibrium is
A) Firm A produces an advanced computer with 80% chance, firm B produces an advanced computer with 20% chance. B) Both firms produce advanced computers with 50% chance. C) Firm A produces an advanced computer with 60% chance, firm B produces an advanced computer with 40% chance. D) Both firms produce advanced computer with 80% chance.
Which of the following conditions would distinguish a competitive firm from a monopolist?
a. The existence of a demand curve for the firm. b. The slope of the demand curve facing the firm. c. The rule of profit maximization, i.e., produce where MR = MC. d. The relationship between marginal revenue and total revenue. e. The existence of diseconomies of scale.
Critics of the Keynesian view argue that increases in government spending financed by borrowing will hamper the recovery from a recession and slow long term growth because
a. more spending and debt will lead to higher future taxes to cover the cost of government and the interest on the debt. b. government spending is directed by political forces, rather than efficient cost-revenue comparisons. c. more political spending will lead to more wasteful rent-seeking activities and less production of goods and services that people value. d. All of the above are true.
A perfectly competitive firm and a monopolistically competitive firm are similar in each of the following respects except
A. each has many buyers and sellers. B. firms sell homogeneous products in both markets. C. in having perfect information. D. for freedom of exit and entry.