Which of the following conditions can help prolong the life of a cartel?
A) There are only a few firms in the market and they all belong to the cartel.
B) There are many firms in the market that are not members of the cartel.
C) It is difficult to know what price any cartel member is actually charging.
D) The cartel has no ability to punish members who cheat on the cartel.
A
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A tax cut will have a greater effect on equilibrium real GDP if the
A. average propensity to consume is larger. B. marginal propensity to save is larger. C. marginal propensity to save is smaller. D. marginal propensity to consume is smaller.
If inflation in Russia is higher than it is in the United States,
A) the value of the dollar will rise in the long run. B) the purchasing power of the ruble in buying Russian goods will rise relative to the dollar. C) the value of the ruble will rise in the long run. D) Both A and C are correct.
The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen. Bob's expected wealth is
A) $0. B) $50. C) $75. D) $100.
Why does cooperative behavior break down in games with finite endpoints?
A) Each player has an incentive to deviate from a cooperative strategy during the last period. B) A Nash equilibrium in pure strategies is not possible in finite repeated games. C) Finite games have the same outcomes as one-period games, and cooperation is not possible in one-period games. D) A Nash equilibrium is only possible in mixed strategies in finite repeated games, but all of the probabilities assigned to particular strategies approach zero as the number of finite game periods becomes large. Thus, we cannot evaluate the expected payoffs in these games.