The kinked demand theory attempts to explain why an oligopolistic firm:
A. has relatively large advertising expenditures.
B. fails to invest in research and development.
C. infrequently changes its price.
D. engages in excessive brand proliferation.
Answer: C
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Refer to the payoff matrix below. If each cell has a probability of occurrence of 0.25, what are Cruise the World's expected profits?
Cruise R Us and Cruise the World compete in the cruise line industry. Each firm needs to determine if they are going to offer special cruise packages with special rates or not offer the specials. The above payoff matrix shows the firms' net economic profit for each set of strategies.
A) $5 B) $10 C) $9 D) $8
Behavioral game theory assumes
A) people act rationally. B) people are subject to biases that cause them to act irrationally. C) that people behave differently when playing games than when "playing for real." D) people optimize using all available information.
To avoid double counting in the calculation of GDP,
a. net exports should be excluded. b. the value of intermediate goods and services should be excluded. c. the capital consumption allowance should be excluded. d. business investment should be excluded. e. government purchases should be excluded.
A single-price monopoly with the same market demand and cost structure as a perfectly competitive market will produce
a. the same output level at the same price as the perfectly competitive market b. less because the monopolist will not produce all units for which marginal revenue exceeds its marginal cost c. less since the monopolist's marginal revenue curve lies below its demand curve d. more because the monopolist will be more efficient e. more because the monopolist's marginal cost curve slopes upward