Which of the following is the best theoretical explanation for why strikes occur?
A. The union and firm know that it is impossible to eventually negotiate an outcome on the contract curve.
B. The firm has a downward-sloped resistance curve.
C. The firm wants to minimize labor costs.
D. The union's leadership wants to please management.
E. The union does not know how valuable labor is to the firm.
Answer: E
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Suppose two economic models give the same predictions --- but one is simplistic and unrealistic in its assumptions while the other is rich in detail and resembles the real world more closely. If the sole goal of the economist is to predict, then the economist should use the simple and unrealistic model.
Answer the following statement true (T) or false (F)
Two individuals are playing a trust game that has three rounds. In the first two rounds of the game, they have accumulated $1,000 as a team
In the third round, Player 1 is blindfolded and asked to decide whether he would let Player 2 guide him to a particular destination or opt out of the game. If he lets Player 2 guide him, Player 2 can either guide him to the correct destination or take him elsewhere. If he leads him to the correct destination, each of them will get half the accumulated money. On the other hand, if Player 2 can lead him astray, Player 2 will get 75% of the accumulated money and Player 1 will get 25%. If Player 1 opts out of the game, he will get 30% of the accumulated money and Player 2 will get 20%. a) What is the equilibrium outcome in this case? b) How will the equilibrium change if the players can impose a guilt penalty of 60% of the accumulated money on the defecting player?
In the calculation of gross domestic product by the expenditure approach, the "investment" component is
A) net investment. B) gross investment minus depreciation. C) gross investment plus depreciation. D) gross investment.
Explain how the money markets of two countries are linked through the foreign exchange market
What will be an ideal response?