Mexico and the members of OPEC produce crude oil. Realizing that it would be in their best interests to form an agreement on production goals, a meeting is arranged and an informal, verbal agreement is reached. If both Mexico and OPEC abide by the agreement, then OPEC's profit will be $200 million and Mexico's profit will be $100 million. If both Mexico and OPEC cheat on the agreement, then OPEC's profit will be $175 million and Mexico's profit will be $80 million. If only OPEC cheats, then OPEC's profit will be $185 million, and Mexico's profit will be $60 million. If only Mexico cheats, then Mexico's profit will be $110 million, and OPEC's profit will be $150 million.Which of the following statements is correct?
A. OPEC's dominant strategy is to abide by the agreement.
B. OPEC's dominant strategy is to cheat on the agreement.
C. OPEC's dominated strategy is to cheat on the agreement.
D. OPEC does not have dominant strategy.
Answer: D
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If the desired reserve ratio is 3 percent and deposits totaled $575 billion, banks would hold
A) $534.75 in reserves. B) $17.25 billion in excess reserves. C) $1,725 billion in currency. D) $17.25 billion in reserves.
Marginal cost is the
A. change in total cost resulting from the purchase of one more unit of the variable input. B. change in total cost resulting from the production of one more unit of output. C. difference between total fixed cost and total variable cost. D. difference between total cost and total expenditure.
A bank run is:
A. the situation that arises from fear that the bank is in danger of running out of money. B. when all depositors from a single bank demand to withdraw all deposits at once. C. when a bank's reserves are not enough to satisfy all withdrawal demands. D. All of these are true.
Marginal Revenue Product with three units of labor would be
A. $160.
B. $200.
C. $260.
D. $460.