The prisoners' dilemma is similar to the problem faced by firms in an oligopoly in the United States because
A) mutual interdependence exists, and collusion is illegal in the United States, so the firms cannot legally communicate.
B) collusion is legal in the United States, and firms can communicate their pricing decisions to each other.
C) failure to cooperate leads to better outcomes than cooperation.
D) private prisons are run by oligopolies.
E) the firms can communicate, but mutual interdependence exists.
A
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Which of the following is true of bank reserves held at the Fed?
A) These reserves are a liability to the bank and an asset to the Fed. B) These reserves are a liability to both the bank and the Fed. C) These reserves are an asset to the bank and a liability to the Fed. D) These reserves are an asset to both the bank and the Fed.
The cost of producing an additional unit of a good or service that falls on people other than the producer is
A) the marginal cost. B) represented by the demand curve. C) represented by the supply curve. D) the marginal external cost. E) the marginal social cost.
A clause in a loan contract disallowing the borrower from acquiring other companies during the term of the loan is an example of a
A) guarantee. B) collateral agreement. C) restrictive covenant. D) moral hazard.
Suppose a product produces substantial spillover costs. If the government adopts a policy that forces producers to bear those costs: a. the equilibrium quantity of the product exchanged will fall. b. the initial misallocation of resources will be corrected
c. the equilibrium price of the product will rise. d. all of the above will be true.