A firm that faces the duopolists' dilemma can avoid the dilemma by:
A. telling customers that it will match any competitor's price.
B. undercutting its competitor's price.
C. agreeing to join a cartel.
D. always choosing its dominant strategy regardless of the other firm's action.
Answer: A
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If the Fed buys bonds from a private bank, ________
A) the Fed's total liabilities will remain unaffected B) the Fed's total assets will remain unaffected C) the private bank's composition of assets will change D) the private bank's total assets will increase
Metering is
a. A form of indirect price discrimination b. A form of direct price discrimination c. An evaluation of a product d. An example of bundling
Answer the following statements true (T) or false (F)
1) The Federal Reserve adheres strictly to the Taylor rule when formulating monetary policy. 2) According to the Taylor rule, if real GDP falls by 1 percent below potential GDP, the Fed should lower the federal funds rate by one-half a percentage point. 3) A liquidity trap occurs when the Federal Reserve reduces reserves in the system, choking off aggregate demand. 4) (Consider This) In March 2010, total bank reserves held at the Fed exceeded total checkable deposits held by the banks.
If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded, then the demand for golf balls is
A) unit elastic. B) perfectly elastic. C) relatively inelastic. D) relatively elastic.