Answer the next question based on the following payoff matrix for two oligopolistic firms in which the numbers indicate the profit in millions of dollars for each firm. Firm A? High PriceLow PriceFirm BHigh priceA = $250A = $325??B = $250B = $200?Low priceA = $200A = $175??B = $325B = $175If firm A adopts the low-price strategy, then firm B would adopt the
A. low-price strategy and earn $325.
B. high-price strategy and earn $250.
C. high-price strategy and earn $200.
D. low-price strategy and earn $175.
Answer: C
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Suppose somebody made the following statement: "There will never be a substitute for Howard Stern, the radio shock-jock." According to the economic way of thinking, the above statement
A) is essentially true. B) is misleading because cloning already exists and it is a matter of time before people will be cloned. C) is incorrect because many people choose to listen to other programs as the perceived costs of listening to Howard Stern change. D) is essentially false because Howard Stern provides nothing of value to society.
Government imposed quantitative limits on the amount of pollution firms are allowed to produce is an example of
A) the Pigovian method of pollution control. B) a tradable emission allowance system of pollution control. C) a Coasian solution to pollution reduction. D) a command-and-control approach to pollution reduction.
The concept of the invisible hand was first introduced to economics by:
A. David Ricardo. B. Adam Smith. C. Thomas Malthus. D. Milton Friedman.
Potential GDP
a. is always less than actual GDP. b. is identical to actual GDP. c. measures inflation. d. is the output an economy could produce at full employment.