Exhibit 9-7 Two-Firm Payoff Matrix
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Suppose costs are identical for the two firms in Exhibit 9-7. If both firms assume the other will compete and charge a lower price, equilibrium will be established by:
A. Camel charging the high price and Marlboro charging the high price.
B. Camel charging the low price and Marlboro charging the low price.
C. Camel charging the low price and Marlboro charging the high price.
D. Camel charging the high price and Marlboro charging the low price.
Answer: B
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a. workers' decisions about the labor-leisure tradeoff respond to a change in the wage. b. workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied. c. firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded. d. firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits.
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A. makes no attempt to ascertain what average people buy. B. makes no attempt to update the market basket. C. only measures the effects of inflation on the poor. D. inadequately deals with updates in product lines for existing goods.
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