Explain how the prisoners' dilemma can be used to examine pricing strategies in an oligopoly
What will be an ideal response?
The players can choose either a high-price strategy or a low-price strategy. If both choose high, they each make substantial profits. If both choose low, they each make smaller profits. If one chooses high and the other low, the one who chooses high makes low profits and the other makes the most profits possible. Each firm will choose low because that is their dominant strategy—regardless of what the other firm does, a firm has higher profits if it chooses the low-price strategy. When both choose low, though, their profits are less than they could have been.
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The process of countries becoming more open to foreign trade and investment is known as outsourcing
Indicate whether the statement is true or false
If the long-run Phillips curve is vertical, then any government policy designed to lower:
a. unemployment will not change the unemployment rate and only increase the inflation rate. b. unemployment will work leaving the inflation rate unchanged. c. inflation will cause employment to rise. d. unemployment will work causing the inflation rate to fall. e. unemployment will work causing inflation to rise.
When the economy is to the right of the potential GDP, what type of gap exists?
a. An unemployment gap b. A structural gap c. A recessionary gap d. An inflationary gap
Regulatory policies that _____ ____ and ______ competition impede ___ _____
Fill in the blank(s) with the appropriate word(s).