An economic model is a realistic depiction of the operation of the economy.
Answer the following statement true (T) or false (F)
False
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The market for bagels contains two firms: BagelWorld (BW) and Bagels'R'Us (BRU). The owners of the two firms decide to fix the price of bagels. The table below shows how each firm's profit (in dollars) depends on whether they abide by the agreement or cheat on the agreement. 
In the Nash equilibrium of this game:
A. Bagel World abides and Bagels 'R' Us cheats B. both firms abide by the agreement C. Bagel World cheats and Bagels 'R' Us abides D. both firms cheat on the agreement
If the MPP of labor is 60 and the price of labor per period is $20, the MPP of machinery is 75, and the price of the machinery per period is $25, in order to achieve optimal input proportions, the firm should use
A. more labor and less machinery. B. more machinery and less labor. C. more labor with the same amount of machinery. D. the current combination.
Suppose you borrow $1,000 from your bank to pay for a bike. This is an example of
A) direct financing. B) indirect financing. C) moral hazard. D) transaction costs.
Suppose that video game discs are a normal good. If the income of video game players increases, you predict that in the market for video games,
A. equilibrium price will increase, and quantity will decrease. B. both equilibrium price and quantity will fall. C. equilibrium price will fall, but quantity will increase. D. both equilibrium price and quantity will increase.