What is the “right” degree of abstraction necessary to analyze an economic problem?
A. Simple abstraction of only minor details
B. Simple abstraction of only irrelevant details
C. Total abstraction of all variables
D. Total abstraction of all irrelevant details
E. There is no “right” degree of abstraction to analyze an economic problem.
Answer: E
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Joe is the owner of the 7-11 Mini Mart, Sam is the owner of the SuperAmerica Mini Mart, and together they are the only two gas stations in town. Currently, they both charge $3 per gallon, and each earns a profit of $1,000. If Joe cuts his price to $2.90 and Sam continues to charge $3, then Joe's profit will be $1,350, and Sam's profit will be $500. Similarly, if Sam cuts his price to $2.90 and Joe continues to charge $3, then Sam's profit will be $1,350, and Joe's profit will be $500. If Sam and Joe both cut their price to $2.90, then they will each earn a profit of $900. You may find it easier to answer the following questions if you fill in the payoff matrix below. 
width="383" />For Joe, keeping his price at $3 per gallon is a: A. profit-maximizing strategy. B. revenue-maximizing strategy. C. dominant strategy. D. dominated strategy.
What is the current WTO policy regarding environmental standards and trade?
What will be an ideal response?
If Q = K1/3L2 the MPL is
a. constant b. diminishing c. increasing
You believe the dollars you have today will be accepted in the future in exchange for goods and services. Which function of money does this illustrate?