Refer to the above payoff matrix for the profits (in $ millions) of two firms (A and B) and two pricing strategies (high and low). Which of the following is the outcome of the dominant strategy without cooperation?
A) Both firm A and firm B choose the high price.
B) Both firm A and firm B choose the low price.
C) Firm A chooses the low price while firm B chooses the high price.
D) Firm A chooses the high price while firm B chooses the low price.
B
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A major reason why it is difficult to lower the barriers to free trade is
A) that total benefits are less than total costs from free trade. B) the uneven distribution of gains and losses from free trade. C) the loss of jobs without any gain of jobs from free trade. D) the inability to compensate losers from free trade. E) that the barriers allow us to compete with cheap foreign labor.
If the Chinese government sets a price ceiling below the equilibrium price, the result will be I. an increase in the quantity demanded. II. a decrease in the quantity supplied. III. a shortage
A) I only B) I and II only C) III only D) I, II, and III
Utilitarianism is the idea that only
A) competition brings efficiency. B) efficiency brings equality. C) income equality is fair. D) efficiency is fair.
The following are obstacles to international investment EXCEPT
A) population growth. B) asymmetric information. C) adverse selection. D) moral hazard.