In the Stackelberg model, the leader has a first-mover advantage because it
A) has lower costs than the follower.
B) commits to producing a larger quantity.
C) reacts to the follower's decision.
D) differentiates its output.
Ans: B) commits to producing a larger quantity.
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A country would tend to experience currency depreciation relative to other countries if: a. the profitability of investments within the country increases relative to the rest of the world. b. people in the foreign currency markets expect the value of the currency to rise in the near future. c. the foreign demand for its exports decreases
d. none of the above
Points outside the production possibility frontier are
A. producible. B. endowment points. C. consumer equilibrium points. D. unattainable.
For this question, assume that policy makers are pursuing a fixed exchange rate regime. Now suppose that a reduction in stock market wealth causes a decrease in consumption. Which of the following will tend to occur in a fixed exchange rate regime?
A) a reduction in Y B) a reduction in the money supply C) no change in the domestic interest rate D) all of the above
A key to gaining cooperative behavior in a repeated game is:
A. that the game must be repeated indefinitely. B. there must be a definitive end to the game. C. the players must commit to always acting in their own self-interest. D. at least one player must have a dominant strategy.