A consumer values a car at $30,000 and a producer values the same car at $20,000 . If a tax is levied on the seller, what level of tax will result in unconsummated transaction?
a. 0%
b. 25%
c. 60%
d. 40%
c
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An increase in disposable income shifts the supply of loanable funds curve
A) leftward and decreases the real interest rate. B) leftward and increases the real interest rate. C) rightward and decreases the real interest rate. D) rightward and increases the real interest rate.
In a subgame-perfect equilibrium
A) each player's strategy constitutes a Nash equilibrium at every subgame of the original game. B) the last mover has an advantage over other players. C) the first mover has an advantage over other players. D) each player has the same response as the others at every subgame of the tree.
The above figure shows the payoff matrix for two firms, A and B, choosing to produce a basic computer or an advanced computer. The mixed-strategy Nash equilibrium is
A) Firm A produces an advanced computer with 80% chance, firm B produces an advanced computer with 20% chance. B) Both firms produce advanced computers with 50% chance. C) Firm A produces an advanced computer with 60% chance, firm B produces an advanced computer with 40% chance. D) Both firms produce advanced computer with 80% chance.
One baseline assumption that economists make about consumer behavior is that:
A. people are rational utility maximizers. B. people will always choose short-term benefits to longer-term payoffs. C. people will always choose what makes them happiest. D. people are unpredictable.