The current rate of unemployment of 5 percent is too high. This is a _______ statement.

A) normative
B) ceteris paribus
C) positive
D) fallacy of false cause


Ans: A) normative

Economics

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There are two firms in the residential paint industry, Cool Shades (C) and Warm Hues (W). They collude to share the market equally. They jointly set a monopoly price and split the quantity demanded at that price. Here are their options:

i. They continue to collude (no cheating) and make $12 million each in profits. ii. One firm cheats and the other does not. The firm that cheats makes a profit of $14 million whereas the firm that doesn't makes a profit of $9 million. iii. They both cheat and each firm makes a profit of $7 million. a. Construct a payoff matrix for these two firms. b. How does this situation relate to the prisoner's dilemma? c. If each firm acted noncooperatively, how much profit would each make? d. Are the firms better off colluding (with no cheating) or competing? Explain.

Economics

If the players in the figure shown act in their own self-interest, then we know that Dunkin Donuts will earn:

This figure displays the choices being made by two coffee shops: Starbucks and Dunkin Donuts. Both companies are trying to decide whether or not to expand in an area. The area can handle only one of them expanding, and whoever expands will cause the other to lose some business. If they both expand, the market will be saturated, and neither company will do well. The payoffs are the additional profits (or losses) they will earn.

A. $2 million.
B. $1 million.
C. $2 million.
D. $0 million.

Economics

The adverse selection problem is least likely in which of the following occupations?

a. lawyer b. barber c. college professor d. marketing analyst e. manager

Economics

The idea that governments can plan growth by setting industrial policies to encourage growth of certain industries:

A. is a proven method for economic growth. B. is controversial. C. has worked for the majority of countries that have tried it. D. None of these is true.

Economics