The following payoff matrix shows the outcomes for the United States and Russia from relying on conventional weapons versus atomic weapons in a military conflict. The percentages refer to the fraction of the population that would die.
This situation above illustrates a positional externality because:
A. using atomic weapons improves each country's outcome but hurts the other country.
B. the game does not have a Nash equilibrium.
C. using atomic weapons is a dominated strategy.
D. no matter what kind of weapons each country chooses, many people will die.
Answer: A
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According to the graph shown, if this economy were an autarky, consumers would get area______ in consumer surplus:
This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
A. A.
B. ABC.
C. ABCDE.
D. ABCDEFG.
In Exhibit 3-16, assume that the market price of chairs is $5 each. This price is:?
A. ?an equilibrium price. B. not an equilibrium price, since there is an excess supply at a price of $5. C. ?not an equilibrium price, since there is an excess demand at a price of $5. D. ?not an equilibrium price, since the rate at which chairs are being supplied is great than the rate at which they are being demanded.
According to David Ricardo, an increase in government spending without any tax increase will not increase aggregate demand because
A) consumers will increase their consumption proportionately more than Keynesian economists believe they will. B) consumers will save less than they otherwise would have. C) consumers will consume less and save more to prepare for increased taxes in the future. D) the private sector is more likely than the public sector to spend any extra income on national defense.
Deadweight loss is the net loss of:
a. consumer surplus. b. producer surplus. c. disequilibrium surplus. d. both a and b.