The threat of punishment in a repeated game tends to:
A. reduce the incentive to break a pricing agreement.
B. anger the other firms, resulting in a price war.
C. maintain prices at the duopoly price level.
D. deter entry.
Answer: A
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Firms such as Taco Bell and Chipotle operate hundreds of restaurants nationwide while firms such as El Pollo Loco operates only in five states. How would you characterize these stores?
A) Taco Bell and Chipotle are duopolists while El Pollo Loco is a monopolistic competitor. B) They are all monopolistic competitors. C) Taco Bell and Chipotle are duopolists while El Pollo Loco is an oligopolist. D) Taco Bell and Chipotle are oligopolists while El Pollo Loco is a monopolistic competitor.
Consider a negative income tax. As discussed in your textbook, under the negative income tax, each person is entitled to a grant of G dollars per month. For every dollar the person earns, the grant is reduced by t dollars. Suppose G = 200 and t = 0.40. Consider an individual whose hourly wage is $10. There are 30 days in a month (so T is 720). Sketch the budget constraint before and after the introduction of a negative income tax.
What will be an ideal response?
Which of the following could lead to an inward shift of the production possibilities frontier?
a. an increase in the cost of one good b. an increase in the utilization of resources c. a rise in the level of technology d. a law is passed whereby a mandatory retirement age of 60 is imposed e. a decrease in the utilization of resources
Which of the following is NOT counted as an economic resource?
a. Money supply. b. Physical labor. c. Mental abilities of labor. d. Land. e. All of the above are included.