Suppose the demand in a certain duopoly market with homogenous goods is Qd = 8,000 - 100P. The two firms in the market are firm V and firm W, and the marginal cost of producing the goods in question is equal to $25. Which of the following describes the Nash equilibrium in this market?
A. PV = PW = $25
B. One of the firms charges a price higher than $25, and one of the firms charges a price lower than $25.
C. PV = PW > $25
D. PV = PW < $25
B. One of the firms charges a price higher than $25, and one of the firms charges a price lower than $25.
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An economy is at a full-employment equilibrium, and then the aggregate demand curve shifts leftward. As a result, the price level ________ and real GDP ________
A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases E) falls; does not change
If a 20 percent increase in the price of a used car results in a 10 percent decrease in the quantity of used cars demanded, then the price elasticity of demand equals
A) 0.5. B) 1.0. C) 2.0. D) 10.0.
Assume that an American investor decides to buy one-year Swiss bonds that are denominated in Swiss francs and pay 2 percent annual interest. For this purpose, $10,000 is exchanged into Swiss francs at an exchange rate of $1 = 2Fr to buy the bonds. How many dollars will the investor have after one year if the exchange rate is $1 = 1.5Fr?
a. $10,000 b. $10,200 c. $15,300 d. $13,600 e. $7,650
Because households have limited incomes, they must
a. rarely take vacations b. live below the poverty line c. allocate their spending carefully d. gamble in casinos frequently e. save for the future