A game in which pursuing dominant strategies results in noncooperation that leaves all parties worse off is a
A) prisoner's dilemma. B) cooperative equilibrium.
C) zero-sum game. D) first-price auction.
A
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A monopolist faces the inverse demand for its output:
p = 30 – Q The monopolist also has a constant marginal and average cost of $4/unit. The government is seeking ways to collect tax revenue from the monopolist and faces two proposals: i. Impose a specific tax of t on the monopolist. ii. Impose an ad valorem tax of a on the monopolist. a. Suppose the government imposes a 20% ad valorem tax on the monopolist. What price and quantity does the monopolist choose and how much revenue does the government generate from the tax? b. Rather than an ad valorem tax, what is the government's revenue from a specific tax of t imposed on the monopolist? Your answer should be in terms of t. c. Show that a specific tax of $3.70/unit generates the same revenue as a 20% ad valorem tax (approximately). d. Which tax has a greater distortion on the monopoly output?
Suppose a production possibilities frontier (PPF) has been plotted on a graph. If the horizontal axis of the graph measures the output of capital goods and the vertical axis measures the output of consumer goods, then a point outside the PPF represents: a. a smaller quantity of consumer goods than that represented by a point inside the PPF. b. an inefficient output combination of the two goods
in the economy. c. an unattainable output combination of the two goods in the economy. d. an output combination of more consumer goods than capital goods. e. a smaller quantity of capital goods than that represented by a point inside the PPF.
In reality, overall growth and income for the poorest are:
A. highly positively correlated, but not perfectly. B. uncorrelated. C. highly negatively correlated, but not perfectly. D. slightly positively correlated.
Cost-push inflation is characterized by a(n):
A. decrease in aggregate supply and no change in aggregate demand. B. increase in aggregate demand and no change in aggregate supply. C. increase in aggregate supply and a decrease in aggregate demand. D. decrease in both aggregate supply and aggregate demand.