Games:
A. may have noncooperative equilibriums that are positive-positive outcomes.
B. must have a dominant strategy present in order to reach an equilibrium.
C. only have one possible stable outcome.
D. None of these statements is true.
Answer: A
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Suppose a perfectly competitive firm's production function is q = L0.2K0.6 and it takes the wage and price as given. Then the firm's long-run demand for labor as a function of K, w, and p is
A) p5((0.2/w)2(0.6/r)3). B) p5((0.2/w)4(0.6/r)5). C) p5((0.2/w)5(0.6/r)4). D) p5((0.2/w)3(0.6/r)2).
In the long run, a reduction in the corporate profits tax will lead to ________ profits in the corporate sector and ________ profits in the noncorporate sector.
A. higher; higher B. higher; lower C. lower; lower D. lower; higher
Average total cost decreases with an increase in output because:
A) the total variable cost decreases with an increase in output. B) the average fixed cost decreases with an increase in output. C) the marginal cost of production increases with an increase in output. D) diminishing marginal returns sets in after a particular level of production.
The price of one product in terms of another commodity is called its
A) relative price. B) money price. C) financial price. D) converse price.