Two competing firms in a duopoly must decide whether or not to offer consumers a coupon for their good. The payoff matrix above represents the daily profit available to the firms under the different coupon strategies
a. What strategies and payoffs are represented by quadrant A?
b. What strategy will Firm 1 pursue if it believes that Firm 2 is offering a coupon?
c. What quadrant represents the equilibrium that will result if the firms act independently (compete)?
d. What quadrant represents the equilibrium that will result if the firms successfully collude?
a. In quadrant A, Firm 1 offers a coupon while Firm 2 does not. As a result, Firm 1 earns $150 in profits and Firm 2 earns $60.
b. If Firm 2 is offering a coupon and Firm 1 does not, Firm 1 will earn $75. If Firm 1 also offers a coupon, it will earn $100. Therefore, Firm 1 will also offer a coupon.
c. Quadrant C.
d. Quadrant B.
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In the months of November and December, people in the United States hold a larger part of their money in the form of currency because they intend to shop and travel for the holidays. As a result, other things the same, the money supply increases
a. True b. False Indicate whether the statement is true or false
The television network newscaster reports that the national inflation rate the past year equaled 4 percent. This report would be of particular interest to a
A. microeconomist. B. normative economist. C. macroeconomist. D. social science economist.
If the money supply in an economy is $300, the price level is $4, and real GDP is $1,500, what is the nominal value of output?
What will be an ideal response?
Which expression below matches most closely the way economists go about testing their models?
A. "Seeing the results is the only way to know if you are right." B. "A bird in the hand is worth two in the bush." C. "In the long run, we are all dead." D. "Consistency is the hobgoblin of small minds."