The above payoff matrix shows the economic profits (in millions of dollars) of two firms in a duopoly that have agreed to a cartel agreement to restrict their output and set their prices equal to the monopoly price
Assuming the game is played once, the equilibrium outcome is where A) both choose the monopoly price.
B) both choose the competitive price.
C) firm A chooses the monopoly price and firm B chooses the competitive price.
D) firm B chooses the monopoly price and firm A chooses the competitive price.
B
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When the federal government changes purchases and/or taxes to stimulate the economy or rein in inflation, such policy is
A. automatic fiscal policy. B. active monetary policy. C. active federal policy. D. discretionary fiscal policy.
A price floor set above a market equilibrium price causes
A) a surplus. B) a shortage. C) producers to receive lower prices. D) consumers to pay lower prices.
Which of the following causes a shortage to become larger?
a. An increase in market price. b. An increase in supply. c. A decrease in price. d. A decrease in demand.
Commitment devices can be:
A. formal policies set up through an employer or third party. B. a tool to help people avoid temptation. C. an informal arrangement. D. All of these statements are true.