Tom, Mary, and Jill have apartments in the same building. Installing a security system for their building would cost $750 . Tom is willing to pay $100 for the security system, Mary is willing to pay $300, and Jill is willing to pay $300 . They meet to vote on whether to pay $250 each. The system will be installed if at least two of them vote for it. After the meeting, the security system will
_____, and this illustrates _____.
a. be installed; the free rider problem
b. not be installed; the free rider problem
c. be installed; a negative externality
d. not be installed; a negative externality
a
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Mutual interdependence means that each firm in an oligopoly
A. depends on the other firms for its markets. B. considers the reactions of its rivals when it determines its pricing policy. C. faces a perfectly inelastic demand for its product. D. depends on the other firms for its inputs.
Which of the following is a key question that must be addressed by an economy?
A) What will be made with our resources? B) How much will we spend producing products? C) Where will we produce our products? D) When should we produce our products?
The idea behind antitrust legislation is to
A) promote competition in the market. B) justify deregulation of industries. C) implement contestable markets. D) create larger firms.
Game theory can be used to demonstrate that oligopolists:
A. rarely consider the potential reactions of rivals. B. experience economies of scale. C. can increase their profits through collusion. D. may be either homogeneous or differentiated.