What is the equilibrium strategy for each firm in a duopolists' dilemma and why do the firms not succeed in colluding to raise the price and profits?
What will be an ideal response?
Each firm sees that its own profit is higher if it cheats on the agreement, and this strategy is best regardless of how any of the other firms act. This motivates all firms to cheat, and they all suffer an outcome that is far less profitable than if they all had complied with the agreement.
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A Pareto improvement
a. cannot take place unless a side payment is made b. cannot take place unless a market is perfectly competitive c. cannot occur unless both parties to a transaction enjoy positive net benefits d. will increase the total net benefits available in a perfectly competitive market e. occurs whenever the sum of market consumer surplus and market producer surplus is positive
The monetary base:
a. Includes currency in circulation, checking accounts, and near money. b. Includes currency in circulation, checking accounts, and near money. c. Includes currency in circulation, cash in the vaults of financial intermediaries (e.g., banks), and deposits of financial intermediaries at the central bank. d. Is equal to currency in circulation. e. Includes all liquid assets in a nation that can be spent
ZZL Corporation has the opportunity to undertake an investment project that will cost $20,000 today. If the interest rate is 20 percent and if the project will yield the company $30,000 in 3 years, then ZZL will undertake the project
a. True b. False Indicate whether the statement is true or false
Which of following helps explain the negative slope of the aggregate demand curve?
a. A lower price level increases real wealth, which encourages spending on consumption. b. A lower price level reduces the interest rate, which encourages spending on investment. c. A lower price level causes the real exchange rate to depreciate, which encourages spending on net exports. d. All of the above. e. None of the above.