When all players play their best strategy given what their competitors are doing, they are following their dominant strategy.
Answer the following statement true (T) or false (F)
False
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The long-run Phillips curve applies when the economy is at full employment, so the long-run Phillips curve is ________, which demonstrates that changes in the inflation rate ________ effect on unemployment
A) horizontal; have no B) an upward sloping straight line with a 45 degree slope; have an C) vertical; have no D) vertical; have an E) a downward sloping straight line with a 45 degree slope; have an
One reason that private solutions to externalities do not always work is that
a. government intervention negates the benefits of positive externalities. b. some people benefit from externalities. c. interested parties incur costs in the bargaining process. d. charities are not well organized.
Mary Jones is the president of a local bank. She knows that half of the loan applicants in town she would classify as high risk and the other half as low risk. She observes that the other banks in town charge two different interest rates, a lower rate for low risk borrowers and the higher rate for high risk borrowers. She decides that to have an advantage over the other banks she will offer an average rate to everyone. The likely result will be:
A. Mary's bank will experience adverse selection and have a disproportionate number of high risk borrowers. B. Mary's bank will experience adverse selection and have a disproportionate number of low risk borrowers. C. Mary's bank will be highly successful as this will provide the bank with a large competitive advantage. D. Mary's bank is likely to see a dramatic increase in both types of borrowers.
Which of the following events would produce an upward shift in the consumption function, other things being equal?
A. an increase in consumer wealth B. a decrease in consumer wealth C. a decrease in autonomous consumption D. an increase in the price level