Refer to the above payoff matrix for the profits (in $ millions) of two firms (A and B) and two pricing strategies (high and low). Which of the following is the outcome of the dominant strategy without cooperation?
A. Both firm A and firm B choose the high price.
B. Firm A chooses the high price while firm B chooses the low price.
C. Both firm A and firm B choose the low price.
D. Firm A chooses the low price while firm B chooses the high price.
Answer: C
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Will, Bill, and Phil decide to study an extra hour for an exam. Instead of studying, they could have gone out to eat, played football, or watched TV. Which of the following statements is correct?
A) The benefit the three students receive must be the same because they all make the same choice. B) The marginal cost of the decision is the same if they make the same score on the exam. C) The students could each have different opportunity costs. D) The students made a rational choice as long as they face no scarcity. E) Going out to eat, playing football, and watching TV are all called sunk costs.
When you specialize in a task that you do best, you are applying the:
a. law of supply. b. law of comparative advantage. c. law of demand. d. law of absolute advantage.
As a result of the Great Recession, job growth did not resume until
A. September 2008. B. March 2009. C. September 2009. D. March 2010.
Suppose a country that has been pegging its currency is faced with a situation where financial market participants now expect some future revaluation. In such a situation, we would generally expect which of the following to occur?
A) an increase in the domestic interest rate B) an announcement by the central bank that a large revaluation will occur in the near future C) an increase in demand for the country's currency D) all of the above E) none of the above