The output level for a perfect price discriminator is found where
a. MR = ATC
b. MC = P
c. MR = P
d. TR = TC
e. AR = ATC
B
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Refer to the above figure. The figure represents the saving function for the consumer. Point B represents
A) the amount of autonomous consumption. B) the point at which saving equals zero. C) a situation in which saving is negative. D) a situation in which saving is positive.
The policy of running deficits and only gradually increasing taxes later to service the debt is referred to as
A) tax-smoothing. B) Ricardian equivalence. C) generational accounting. D) crowding out.
The recent growth records of Japan and Hong Kong during the last 50 years indicate that a nation can grow rapidly without:
a. securely defined property rights. b. adopting modern technology. c. significant capital formation. d. abundant domestic natural resources.
There are two existing firms in the market for computer chips. Firm A knows how to reduce the production costs for the chip and is considering whether to adopt the innovation or not. Innovation incurs a fixed setup cost of C, while increasing the revenue. However, once the new technology is adopted, another firm, B, can adopt it with a smaller setup cost of C/3. If A innovates and B does not, A earns $30 in revenue while B earns $10. If A innovates and B does likewise, both firms earn $20 in revenue. If neither firm innovates, both earn $10. If C = 12, which is the perfect equilibrium of the game?
A. Neither firm innovates. B. A innovates, B does not. C. A innovates, B innovates. D. None of the answers is correct.