Is a Nash equilibrium stable? Explain
What will be an ideal response?
A Nash equilibrium is stable because it is the only outcome from which none of the participants in a strategic game wants to deviate. At the Nash equilibrium, the participants of a strategic game see their current option as optimal given the other firm’s strategic choice, thus making it stable and persistent once achieved.
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The price of coffee rose 50 percent and coffee sales fell 25 percent. Doughnut sales also fell 25 percent. From this information, we can conclude that
A. demand for coffee is inelastic. B. coffee and doughnuts are complements. C. the cross elasticity of demand is minus 0.5 percent. D. All of the responses are correct.
Which of the following best describes the relationship between the velocity of money and the demand for money?
a. The demand for money is not related to the velocity of money. b. When the demand for money increases, the velocity of money increases. c. The demand for money must be stable for the velocity of money to increase. d. When the demand for money declines, the velocity of money increases.
Use the following graph to answer the next question.
A 3% general sales tax would have a structure that is illustrated by
A. curve A. B. curve B. C. curve C. D. none of the curves.
Which of the following is not a major role of financial institutions?
a) It seeks to minimize interest rates that it pays to savers. b) It seeks to diversify assets to reduce risk. c) It seeks to minimize transaction costs. d) It seeks to minimize information costs.