A firm that incurs an emissions charge for polluting will install more pollution control equipment only if the:
a) Emissions charge exceeds the increased cost of installing the equipment.
b) Emissions charge falls.
c) Equipment will reduce pollution.
d) Equipment cost is less than the marginal cost of production.
Answer: a) Emissions charge exceeds the increased cost of installing the equipment.
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Answer the following statement(s) true (T) or false (F)
1. The Battle of the Sexes game has two Nash equilibria, neither of which is Pareto optimal. 2. All outcomes in the Copycat Game are Nash equilibria. 3. A solution concept is any way of analyzing a game which leads to the discovery of a Nash equilibrium which solves the game. 4. The concept of Nash Equilibrium is an important solution concept because it helps make predictions. 5. When a game has more than one Nash equilibrium, it is unlikely that a stable equilibrium will ever be reached.
The notion of opportunity cost allows the measurement of tradeoffs
Indicate whether the statement is true or false
Because government agencies lack the kind of competition found in the marketplace, they also can lack:
a. profits. b. efficiency. c. cohesion. d. accountability.
As the period for firms to expand output is lengthened, the elasticity of the market supply curve will
a. approach zero. b. increase. c. decrease. d. remain the same since time does not affect the elasticity of market supply.