Zippy's and Tony's are rival pizza restaurants in a small town (together they form a local duopoly). Zippy's management determines that if it increases its advertising expenditures, it will increase profits regardless of whether Tony's
increases its advertising budget. Based on this information, we can conclude that:
A. this is a one-time game.
B. Zippy's has a dominant strategy in this advertising game.
C. this advertising game will reach a Nash equilibrium.
D. Zippy's has first-mover advantages in this advertising game.
Answer: B
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Which of the following explains the shape of a total fixed cost curve?
a. It slopes downward because fixed costs decrease as output increases. b. It slopes upward because fixed costs increase as output rises. c. It is horizontal because fixed costs do not change with changes in output. d. It is U-shaped because fixed costs are high at very low and very high output levels.
Economic rent is
A. the sum of the payment actually received by an owner of a factor of production and her reservation price. B. the payment actually received by an owner of a factor of production. C. the reservation price of an owner of a factor of production. D. the difference between the payment actually received by the owner of a factor of production and her reservation price.
Figure 5.4 shows a firm's marginal cost, average total cost, and average variable cost curves. At Q = 100, the total variable cost is:
A. $2,800. B. $4,000. C. $4,500. D. $6,300.
When the labor force participation rate is declining, the
A. Percentage of the total population that is employed is rising. B. Percentage of the working-age population that is willing and able to work is declining. C. Percentage of the working-age population that is outside the labor force is declining. D. Unemployment rate is rising faster than the total population rate.