Refer to the information provided in Table 14.1 below to answer the question that follows.
Table 14.1B's Strategy
?Raise PriceDon't Raise Price?RaiseA's profit $3,000A's profit $10,000?PriceB's profit $3,000B's profit $15,000A's Strategy????Don'tA's profit $15,000A's profit $5,000?RaiseB's profit $10,000B's profit $5,000Refer to Table 14.1. Firm A?s optimal strategy is
A. to not raise the price of its product.
B. dependent on what Firm B does.
C. to raise the price of its product.
D. indeterminate from this information, as no information is provided on Firm A?s risk preference.
Answer: B
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The characteristic of limited liability enables corporations to
A. raise large amounts of financial capital. B. exist even when owners die. C. start up and dissolve easily. D. avoid taxes on some of their profits.
An increase in supply will cause the equilibrium price to ________ and the equilibrium quantity to ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
If the national debt is owed entirely to U.S. citizens,
a. paying off the debt will necessarily stimulate growth. b. future interest payments on the debt are not a burden to the nation as a whole. c. future economic growth will necessarily be slowed. d. the debt constitutes a burden to these citizens.
The central bank is said to monetize the deficit when it
a. prints Federal Reserve notes to satisfy the increased demand for money. b. sells government bonds from its own portfolio of government securities. c. requires member banks to buy the bonds to finance the deficit. d. purchases the bonds that the government issues.