Irene’s Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie’s Ice-cream. If it enters the market, Mattie’s can either accommodate him and share his 10million in profits equally with Irene or fight him and cause a 5million loss for each in a price war. In a sequential game, if Irene decides to enter the market, what would be Mattie’s best response? Accommodate Fight Run away Shut down
a. Shut down
b. Fight
c. Run away
d. Accommodate
Answer: d. Accommodate
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In Figure 4-18, there would be a shortage of T-shirts if the price were
A. $10 and the market price will rise. B. $8 and the market will tend toward equilibrium. C. below $8 and the shortage persists. D. between $8 and $6 and the shortage will get larger.
The price elasticity of supply is the __________________ change in the quantity supplied of a good or service divided by the percentage change in the price.
a. quantity b. percentage c. relative d. absolute
Which of the following is an example of implicit collusion?
A) product differentiation B) a retaliation strategy C) a second-price auction D) price leadership
Indifference curves that are thick violate
A) the assumption of transitivity. B) the assumption that more is better. C) the assumption of completeness. D) none of the assumptions.