In most business situations where firms compete, often they can escape the prisoner's dilemma and reach the most profitable outcome. Which of the following is a reason for this?
A) Firms engage in aggressive advertising to overcome the barriers to loyalty.
B) Most games are one-shot games so firms learn from their mistakes.
C) Most games are repeated games and firms can employ retaliation strategies against those who do not cooperate.
D) Firms are constantly improving their products and anticipating changing consumer tastes.
Answer: C
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Firefighters are highly skilled workers who are typically employed by city governments. If a city reduces the wage rate paid to firefighters to be less than the equilibrium wage rate, what happens to the economic rents earned by the firefighters?
A) Increase B) Decrease C) Remain unchanged D) Public employees like firefighters cannot earn economic rents
Which of the following is a possible critique of the decision theory under uncertainty presented in the text?
A. Decision theory assumes that people face the same situation (uncertainty) repeatedly. B. Decision theory assumes that people are good at math. C. People are not risk averse. D. People do not always know the "true" probability of complicated events.
At the state and local levels of the U.S. government, a majority of government employees work in which of the following areas?
A. Postal service. B. Education. C. Hospitals and other health care. D. Police and corrections.
When the AS curve is vertical, fiscal policy will be
A. Effective against unemployment but not inflation. B. Effective against both inflation and unemployment. C. Effective against inflation but not unemployment. D. Ineffective against both inflation and unemployment.