Both firms in a Cournot duopoly would enjoy higher profits if:
A. the firms simultaneously reduced output below the Nash equilibrium level and one firm reduced output below the Cournot Nash equilibrium level, while the other firm continued to produce its Cournot Nash equilibrium output.
B. one firm reduced output below the Cournot Nash equilibrium level, while the other firm continued to produce its Cournot Nash equilibrium output.
C. each firm simultaneously increased output above the Nash equilibrium level.
D. the firms simultaneously reduced output below the Nash equilibrium level.
Answer: D
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Economic models are often based on assumptions because they:
A) help simplify complex real-world phenomena. B) help explain the past. C) help test models even when relevant data are unavailable. D) help predict the future with higher accuracy. A model is based on an assumption that an additional year of education increases a student's future wage by 20%.
Why do preference reversals occur?
What will be an ideal response?
Refer to Table 14-1. Is there a dominant strategy for Star Connections and if so, what is it?
A) Yes, Star Connections should increase its advertising budget. B) Yes, Star Connections' dominant strategy is to collude with Godrickporter. C) No, its outcome depends on what Godrickporter does. D) Yes, Star Connections should not change its advertising budget.
Only when the goods market is in equilibrium is it true that ________
A) actual expenditure equals output B) the amount of goods and services produced equals actual expenditure C) planned expenditure equals the amount of goods and services produced D) demand for foreign goods equals foreigners' demand for domestic goods E) none of the above