Given the dominant strategy of MiiTunes according to the figure, we can predict that The Rock Shop:
This figure displays the choices and payoffs (company profits) of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to make a profit at such low prices. The Rock Shop is trying to decide whether or not it should enter the market and compete with MiiTunes.
A. will enter and enjoy profits of $4 million.
B. will enter and lose $2 million.
C. will not enter and earn $0.
D. Their actions cannot be predicted because they do not have a dominant strategy.
A. will enter and enjoy profits of $4 million.
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Product differentiation helps determine the slope of the demand curve facing a firm in monopolistic competition
a. True b. False
The income effect measures how
a. the quantity of a good supplied changes in response to a change in income b. the quantity of a good demanded changes in response to a change in the price of a good, with income constant c. far the budget line shifts due to a change in income d. the quantity of a good demanded changes in response to a change in purchasing power e. income changes when prices change, holding quantities demanded constant
A cash-payment welfare program, where eligibility is no longer an entitlement but emphasizes welfare-to-work is
a. food stamps b. Medicare c. Social Security d. TANF e. SSI
Which of the following is NOT mentioned in the textbook as a constraint that affects the economy?
A. Households are limited in what they can purchase by government regulations. B. Households are limited in what they can purchase by their income. C. Businesses are limited in what they can produce by past investments in factories, processes and materials. D. Businesses are limited in what they can produce by technology.